About Appraisers
• What does an appraiser do?
The fundamental role of an appraiser is to provide a professional opinion, or estimate of market value. The appraiser will inspect the subject property, paying attention to its location, amenities, updates and size. The appraiser also inspects the surrounding neighborhood, noting similar/comparable properties and their sale price.
• How are appraisers certified?
Each state has specific requirements, such as continuing coursework, tests and in-the-field experience, that must be met in order for an appraiser to obtain and maintain a license/certification to appraise real estate property.
• Who do appraisers work for?
Appraisers are an objective third party with no financial or personal connection to the parties involved in the real estate transaction. Generally, appraisers work for lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide professional opinions in cases of taxation, litigation and investment.
About Appraisal Reports
• What in an appraisal?
An appraisal is the thought process which concludes with an expert estimate of market value.
• What does an appraisal report contain?
Appraisal reports may contain and are not limited to the following:
- Detailed description of the subject property.
- Comparisons of similar properties.
- Evaluation of the overall real estate market area.
- Statements regarding property issues which lower the value.
- Final estimate of value.
• Why do I need a professional appraisal?
There are many reasons you may want to have a professional estimate of value on your commercial/residential property:
- Obtain a loan to loan (purchase, refinance, equity, etc.).
- Lower your tax burden.
- Establish replacement value for insurance purposes.
- Appeal high tax taxes.
- Eliminate Private Mortgage Insurance (PMI).
- Obtain a fair and equitable division of assets in a divorce proceeding.
- Estate planning/settlement.
- Negotiating tool when purchasing real estate.
- Determine a market value/asking price when selling real estate.
- Analyze the feasibility of proposed improvements
- Protect your rights in a condemnation case.
- Required by the IRS or other government agency.
- Lawsuit.
• What is the Cost Approach?
The appraiser estimates how much it would cost to replace the structure if it were destroyed. This approach is most useful for newer properties where the costs to build are known.
• What is the Sales Comparison Approach?
The appraiser estimates the subject property's market value by comparing it to comparable properties, or comps, that have sold in the area.
• Who actually owns the appraisal report?
In most real estate transactions, the lender orders the appraisal. Although the property owner may pay for the report, the lender retains the right to use the report and any information contained within.
• What is the difference between a residential home appraisal and a home inspection?
An appraisal in not a home inspection. Although the appraiser documents condition and construction, the appraiser is not performing the function of a home inspector. An inspector conducts a complete examination of the structure from roof to foundation, checking all assessable areas and systems which includes: heating, air conditioning, plumbing, electrical, insulation, roof, foundation, floors, walls, and windows.
• What do I do to get ready for the appraiser?
The first step in most appraisals is the inspection. During this process, the appraiser will visit the property to measure it, determine the layout of rooms, confirm the general condition of the structure's interior and exterior, and take photographs which will be included in the appraisal report. Be certain to move any items that will make it difficult for the appraiser to measure the structure. Please have the following documentation ready for the appraiser (if applicable):
- Itemized list of improvements and upgrades including date of installation and cost.
- Information on any listing or purchase of the property within the last three years.
- Written property agreements such as a maintenance agreement.
- Copy of the structure's blueprints.
- Most recent real estate tax bill and/or legal description of property.
- Title policy that describes easements or encroachments.
• How does an appraiser determine square footage?
The appraiser will measuring the exterior of the structure to determine square footage. For residential properties, all non-living areas such as garages and covered porches are not included.
• Will the appraiser include my finished basement in the appraisal?
Yes, but finished basements are calculated separately from the above-ground living area. The contributory value of a finished basement may or may not be influenced be the local market, government regulations, the quality of the finish, and other factors.
• How long is an appraisal good for?
Although an appraisal does not have a fixed expiration date, most lenders consider them outdated after six months.
About Appraisal Valuations
• What is market value?
Market value is the price at which real estate would sell within a reasonable amount of time, typically one to thee months.
• How does an appraiser arrive at market value?
The appraiser analyzes market data, including older and recent comparable sales, current offers, pending sales and proposed improvements. After analyzing market data, the appraiser compares your property to comparable properties within the market area to arrive at an estimate of market value.
• Where does an appraiser get the information used to estimate value?
The appraiser gathers information from a variety of sources, including a local Multiple Listing Service, local real estate professionals, county courthouse records, private data vendors, interviews with owners and the appraiser's own personal knowledge. The quality and reliability of each piece of information is weighed by the appraiser.
• I have the largest house in our neighborhood. If the appraiser uses comparable sales from my neighborhood will my home appraise for less?
Not necessarily. The appraiser will consider all relevant real estate data in the area. When analyzing recent sales, the appraiser will look for the homes most comparable to yours in terms of physical characteristics and the appeal of the location. If sales in your neighborhood do not make the best comparisons, the appraiser may determine that the best comparable home sales are in another neighborhood.
• What assurance is there the value arrived at in the appraisal report is valid?
Each
• Which home renovations add the most value in price?
The contributory value of home improvements varies from market to market. The best home-improvement value for the price is driven by the wants and needs of each particular neighborhood.
