When do you need an appraisal?
Every year, countless people in the United States buy, sell or refinance property. Most, if not all, of these transactions include a simple line item for an appraisal. It has become an understood and accepted part of a real estate transaction. ”Let’s bring in the expert and make sure we’re not spending too much on this property.
There are other times when the services of a certified, licensed, independent real estate professional can be of service, including insurance, estate settlements, bank and private trusts, probate, equitable distribution among heirs, charitable donations and determining federal estate & gift tax liability. The highly trained individuals behind these services are always looking for ways to put their expertise to work for property owners and the people who support them.
How important is a Professional Real Estate Appraisal?
Because much private, corporate, and public wealth lies in real estate, the determination of its value is essential to the economic well-being of society. It is the job of the professional appraiser to determine these values by gathering, analyzing, and applying information pertinent to a property.
Unquestionably, the professional opinion of the appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, this professional service is a vital “check in the system,” protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.
How long does an appraisal take?
The appraisal of real estate can take from several hours to several weeks or months, depending upon the size and complexity involved.
After the initial inspection of the property the appraiser spends time touring through and familiarizing himself with the neighborhood or area, then gathers information and data from a wide variety of sources, including the local Multiple Listing Service, local tax assessors records, local real estate professionals, county courthouse records, private public record data vendors, interviews with sellers and buyers, appraisal data co-operatives and his or her own personal knowledge or office files from previous appraisals. When the field work is finished, the appraiser considers the quality and reliability of each piece of information and completes the report at his office. The narrative report can consist of a few or exceed a hundred pages depending upon the complexity of the assignment.
What is the difference between a certified appraisal and a brokers market analysis or price opinion?
A certified appraisal is a formal, impartial estimate or opinion of value, usually written, of an adequately described property, as of a specific date, and supported by the presentation and analysis of relevant data. It is prepared as a result of a retainer, for reliance by identified parties, and for which the appraiser accepts responsibility. Only a state certified appraiser can provide a certified appraisal.
A comparative market analysis or brokers price opinion is an informal estimate of market value, based on comparable sales in the neighborhood, performed by a real estate agent or broker. You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder’s or assessor’s offices, through private companies or increasingly on the Internet through such sources as Domania or Yahoo etc.
The most important difference between a certified appraiser and broker or real estate sales agent is their motivation. A brokers typical goal is to obtain a listing and earn a commission. Although most brokers and agents are honest some might tell you what they think you want to hear. A certified appraiser is independent and has no axe to grind. They have no ulterior motives. Their only concern is to deliver a fair, accurate objective appraisal.
What makes an Appraiser “Qualified”?
Many states require all real estate appraisers to be, at a minimum, state licensed or state certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation.
What rules must appraisers follow?
The Appraisal Standards Board (ASB) sets forth the rules for developing an appraisal and reporting its results. In addition, it promotes the use, understanding and enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
FIRREA requires that real estate appraisals used in conjunction with federally-related transactions be performed in accordance with USPAP. USPAP contains the recognized standards of practice for real estate, personal property and business appraisal.
The authority of USPAP extends beyond FIRREA. Since 1992, the Office of Management and Budget (OMB) has required federal land acquisition and direct lending agencies to use appraisals in conformance with USPAP.