An appraisal is the act or process of developing an opinion of value. It involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience and professional judgment of the appraiser.
What is the role of the appraiser?
The role of the appraiser is to develop accurate and impartial, third-party opinions of real estate value, providing assistance to those who own, manage, sell, invest in and/or lend money on the security of real estate.
What qualifications must appraisers have?
At minimum, all states require appraisers to be state licensed or certified in order to provide appraisals to federally regulated lenders. However, Appraisal Institute members holding the MAI, SRPA and SRA designations have fulfilled rigorous educational and experience requirements that go beyond these minimum requirements. The Appraisal Institute currently confers the MAI professional membership designation on those who are experienced in the valuation of commercial, industrial, residential and other types of properties. The SRA professional membership designation is held by those who are experienced in the analysis and valuation of residential real property. All Appraisal Institute members must adhere to a code of professional ethics and strict standards of practice.
How do well-credentialed appraisers add value to real estate transactions?
They bring knowledge, experience, impartiality and trust to the transaction. In so doing, they help their clients make sound decisions with regard to real property.
What are the components of an appraisal?
Most appraisals are reported in writing, although in certain circumstances and appraiser may provide an oral appraisal. A written appraisal report generally consists of: a description of the property and its locale; an analysis of the “highest and best use” of the property; an analysis of sales of comparable properties “as near the subject property as possible”; and information regarding current real estate activity and/or market area trends.
What are the most important considerations in the valuation of real estate property?
The value indicated by recent sales of comparable properties, the current cost of reproducing or replacing a building, and the value that the property’s net earning power will support are the most important considerations in the valuation of real estate property.
What is the range of services appraisers provide?
In addition to residential and/or commercial appraisals, and depending upon an appraiser’s designation and qualifications, he or she can provide/assist with some or all of the following:
• Estate planning and estate settlements.
• Tax assessment review and advice.
• Advice in eminent domain and condemnation property transactions.
• Dispute resolution, including divorce, estate settlements, property partition suits, foreclosures, and zoning issues.
• Feasibility studies.
• Expert witness testimony.
• Market rent and trend studies.
• Cost/benefit or investment analysis, e.g. financial return on remodeling.
• Land utilization studies.
• Supply and demand studies.
When hiring an appraiser, what types of questions should I ask?
The following questions would be appropriate:
• What professional designations do you have and from whom?
• Are you licensed or certified in the state in which you live?
• How long have you been in practice?
• What level of experience do you have in this particular market and with this type of property?
• Are you familiar with property in this neighborhood?
• What types of clients have you had (homeowners, estates, lenders, relocation companies)?
