Frequently Asked Questions
About Real Estate Appraisers and Appraisals
What is an appraisal?
An appraisal is a professional appraiser's opinion of value. The preparation of an appraisal includes research into appropriate market areas; collection and analysis of information; and the knowledge, experience and professional judgment of the appraiser.
What is the role of an appraiser?
The role of the appraiser is to provide objective, impartial and unbiased opinions about the value of real property - 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?
States require appraisers to be state licensed or certified in order to provide appraisals to federally regulated lenders. However, appraisers who become Designated members of the Appraisal Institute typically surpass the minimum state requirements. They fulfill rigorous educational and experience requirements and must adhere to strict standards and a code of professional ethics. The Appraisal Institute currently confers the MAI designation on appraisers who are experienced in the valuation of commercial, industrial, residential and other types of properties. The SRA designation is held by appraisers who are experienced in the analysis and valuation of residential real property. The AI-GRS designation is held by appraisers who are experienced in general appraisal review, while the AI-RRS designation is held by appraisers who are experienced in residential appraisal review.
What are the most important considerations in the valuation of real 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 property.
What are the components of an appraisal report?
Most appraisals are reported in writing, although in certain circumstances, an 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.
When hiring an appraiser, what types of questions should I ask?
The following questions would be appropriate:
• Are you licensed or certified in the state in which you live?
• What professional designations do you have and from what groups?
• 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).
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