Below you’ll find answers to the questions we get asked the most.
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What is an appraisal?
An appraisal is a professional report prepared by a qualified, certified appraiser.
An appraisal provides a Market Value Estimate of your property based on recent comparable sales in the area.
It is an unbiased estimate of the true value of a property at a single point in time.
When buying a home, an appraisal can confirm whether the property is worth the amount you are paying.
What is an appraisal report?
Clearly states the kind of value being determined, such as fair market (used for taxes), replacement (used for insurance coverage), liquidation (used for bankruptcy or business dissolution), etc.
Describes the property being valued.
Details the procedures used to estimate the value; such as: Analysis of comparable sales; analysis of cost data; estimation and analysis of income; and the relation of the appraisal values to a specific point in time.
Finally, the report will include a certification statement and signature of the appraiser responsible for validity, objectivity and specifies the personal qualifications of the appraiser.
What is an appraiser?
An appraiser is a highly skilled practitioner of the appraisal process, the appraiser identifies and provides a value for various types of property.
Appraisers fall under several categories of appraisal types such as personal property, real property, machinery and technical specialties, appraisal review and management, gems and jewelry and business valuation.
What qualifications do appraisers need?
Real estate appraisers need to be able to make prudent judgments and independent decisions.
Appraisers are certified by state boards upon completing an apprenticeship with a mentor, mandated education requirements and upon passing a state exam.
They must be skilled in gathering and evaluating facts and must understand how to access the variety of data sources that are needed for comparisons and analysis.
Technical competence in reading survey drawings and blueprints and identifying construction features and materials is applied in many situations.
Critical thinking and analytical skills are essential for individuals involved in formulating opinions who work in consulting and advisory capabilities.
How are appraisers certified?
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state.
However, licensing and certification are most often associated with many hours of coursework, tests and practical experience.
Once an appraiser is licensed, he or she is required to take continuing education courses in order to keep the license current.
Why would I have an appraisal done?
Appraisals are done for many reasons ranging from estate planning to buying a home to determining the value for insurance or tax purposes; for more information on our appraisal services please see our Services page.
The most important factor to be concerned with is choosing the correct appraiser to do the work.
Why do I need a professional appraisal?
If you’re selling your home, an appraisal helps you set the most appropriate value.
If you’re buying, it makes sure you don’t overpay.
If you’re engaged in an estate settlement or divorce, it ensures that property is divided fairly.
A home is often the single, largest financial asset anybody owns.
Knowing its true value means you can the right financial decisions.
Don’t believe what you see on TV!
Professional-quality appraisals can’t be done in 10 minutes or less and they are not free.
Like any other profession, you get what you pay for.
What are some things to watch out for?
Independence and objectivity are critical to an unbiased and accurate appraisal.
Therefore never use the services of an appraiser who;
– offers to purchase what they appraise.
– charges a percentage of the item’s value for the appraisal.
– who has either a current or future interest in the value of the item unless it is disclosed to you and disclosed in the appraisal report.
Furthermore, take time to research whom you are working with to determine if they a geographically competent to appraise in your market, after all real estate is all about location!
What does an appraisal cost and how long does it take?
It depends on the nature of the property.
A proper, credible valuation of residential real estate often takes a week or less.
However in some more complex assignments may take a bit longer.
The cost varies significantly as well.
Fees are set by the individual appraiser and are often based on an hourly, half-day or full-day basis.
The appraiser’s fee ranges with experience and expertise.
Most appraisers do charge for research time and there may also be costs for expert consultation.
Be sure the appraiser gives you a fee schedule or estimate before work has begun and that your appraisal agreement defines the scope of work and when the report will be delivered.
How long is my appraisal up-to-date?
This depends on the property, the purpose of the appraisal and the neighborhood market conditions.
Technically an appraisal is only good as of its effective date, this is due to potential changes in market conditions.
However lenders will commonly rely on an appraisal for about 120 days, in certain cases, the lender may allow for the appraisal to be “re-certified” for longer.
Once the appraisal has been delivered, how can I have assurance that the value indicated is trustworthy?
A reliable appraisal report really begins with ensuring that you hire a qualified and competent appraiser.
However, even the best appraisers sometimes make mistakes.
Therefore when hiring an appraiser you should ensure they are willing to review your report with you upon completion, answer any questions you may have, and address any mistakes or oversights they may have made.
How is an appraisal different than a home inspection?
Home inspectors do not generate an opinion of value and are not appraisers.
The point of a home inspection is to evaluate the structure of the home from bottom to attic.
The average home inspector’s report includes an evaluation of the integrity of the house’s heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Where does an appraiser get the information used to estimate value?
Data can be divided into Specific and General.
Specific data is gathered from the home itself; Location, condition, amenities, size, and other specific data are gathered by the appraiser during an inspection.
General data is gathered from a number of sources; Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables.
Tax records and other public documents verify actual sales prices in a market.
Flood zone data is gathered from FEMA data outlets, such as Metro Appraisals’ InterFlood product.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
Which home renovations add most to the value?
The answer to this is different depending upon the location of the home.
Different markets value amenities differently.
Adding a central air conditioner in Houston, Texas may add significant value while putting one in a home located in Buffalo, New York might not have much impact.
As a rule, the most value returned from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home.
Bathrooms were second, returning 85%.
What is the difference between a Certified Residential vs. Certified General appraiser?
There are basically two types of appraisers:
- Certified Residential
- Certified General
The difference between the two comes out to the number of qualified education hours, the number of experience hours and any additional requirements from their state of practice.
For Certified Residential Appraiser:
- Can appraise a residential single-family or multi-family property with up to four units regardless of value or complexity.
- Can assess “highest and best use” if the purpose will be solely residential.
- Cannot assess commercial, mixed-use or income-producing property.
- Should not assess property that has income-producing potential (i.e. large tracts of land that may offer the possibility of agricultural or recreational development)
For Certified General Appraiser:
- Highest level of education and experience.
- Can assess both residential and commercial properties.
- Can assess mixed-used and income-producing properties.
- Can assess any property regardless of complexity or value.
- Can assess any property where “highest and best use” is not fully determined.
To learn more, please check out our blog post.