Frequently asked consumer
The answers on this page are provided by the Webmaster of this site, Ann O'Rourke, a professional appraiser. For more information go to about us. She frequently answers these questions!
She has a book in process for home owners called How to Maximize Wealth in Your Home. with many practical tips from her almost 20 years of appraising. Sample chapters:
Note: the rest of this page is a long list of questions, which you can scroll through.
What is an appraisal?
An appraisal is defined as an opinion of value by professional appraisal standards
(Uniform Standards of Professional Appraisal Practice, see below). Appraisers consider
appraising to be both an art and a science. You probably have an opinion of the value of
your home. Your opinion and a professional appraiser's opinion may be the same. But
appraisers are required to be objective and impartial in their analyses and opinions. A
professional appraiser has been trained in appraisal methodology and looks at how your
home compares with sales and listings of homes similar to yours, considers many
factors such as price trends and proximity to a freeway, complies with professional
standards, and usually completes a written report.
What is an appraiser?
An appraiser is a real estate professional who specializes in providing opinions of value
(appraisals). Most appraisers are real estate appraisers, who specialize in real property.
Other appraisers specialize in other types of property, such as gems or machinery and
equipment. Professional appraisers have taken courses and been supervised during their
training period. State licensed and certified appraisers must pass a test and have
completed basic education and continuing education. Most states also require a period of
supervision, usually 2,000 hours before being able to do appraisals "on your
What's the difference between an appraiser and a real estate agent? Real estate agents are salespersons. They also provide appraisals to assist buyers and sellers, and to make listing presentations. Typically no fee is charged for these appraisals.
I frequently recommend getting "appraisals" from two or three real estate agents if a home owner is thinking about putting their home on the market. However, some home owners want an independent appraisal, particularly if they already have a buyer or are selling it themselves.
Some real estate agents provide appraisals for other purposes
such divorce or "evaluations" for mortgage lending purposes. A fee may or may
not be charged for these appraisals. If the real estate agent is providing an appraisal,
that is not part of their role as a salesperson, and is a Realtor member of the National
Association of Realtors (NAR), NAR regulations require adhering to professional appraisal
standards of the Uniform Standards of Professional Appraisal Practice (see below).
Who can do
appraisals? In most states, anyone can do appraisals for non-lending
purposes. However, only state licensed and certified appraisers are subject to discipline
by their state regulatory agency. Professional appraisers have training and experience in
appraisal methods and techniques.
What do appraisers really do? When I inspect a home for an appraisal, the inspection is really the "tip of the iceberg" of the work I do. Before I go to the house, I research public records information, get a plat map, check the zoning and flood data, and printout sales and listings of similar homes. During the inspection, I make a drawing of the home and other improvements such as a swimming pool and make notes on physical characteristics such as floor coverings and built in appliances. I check the site boundaries against my plat map. I look at the adjacent properties. After completing the inspection, I select comparable sales and listings and take photos of them. Back at the office, I contact real estate agents for more information on the sales terms, condition of the home, etc., reconcile conflicting information from different data sources, and write up the report. Total time? About 6 to 8 hours, on average. I work in the San Francisco Bay Area, where data is computerized and plentiful. Appraisers working in rural areas or with less data availability will take longer to complete an appraisal.
Appraisals of income producing property are much more time consuming as more research and analysis is required. The time can vary from a few days on a small apartment building to many weeks for a large, complex property.
For many years, the appraisal process has been seen by many
as mysterious. This is partly the fault of appraisers, as we have not informed the public
of what we really do.
What about appraiser licensing? Because of the savings and loan crisis in the late 1980s, appraisal licensing was set up in every state by the mid 1990s. A few states are "mandatory" where all appraisals must be done by licensed or certified appraisers, but most only require licensed or certified appraisers for mortgage loans over $250,000 (an other state and federal requirements). A few states licensed appraisers prior to that time.
State certified appraisers (residential and general) have
higher requirements than state licensed appraisers. For more information on requirements, Appraisal Foundation Web site at
www.appraisalfoundation.org Residential appraisers can appraise one to four
family properties, and sometimes small apartment or commercial properties. General
appraisers can appraise all types of properties.
are appraisers' professional standards? All state licensed and certified
appraisers must adhere to the Uniform Standards of Professional Appraisal Practice
(USPAP). A copy of the current USPAP can be found on the Appraisal Foundation Web site at
www.appraisalfoundation.org. Go to the Appraisal Standards Board section, then click
on USPAP. The Appraisal Foundation is a national nonprofit organization that determines
USPAP and educational requirements for state licensed and certified appraisers. Members of
appraisal professional organizations, whether or not they are licensed or certified, are
required to adhere to USPAP.
state laws are appraisers subject to? State licensed and certified appraisers
are also subject to their state's Appraisal Regulator's requirements. When doing work for
lenders, they are subject to the lender's requirements. For links to your state's
appraisal regulatory agency, try the Appraisal Subcommittee
site at www.asc.gov. Look for a link on the left side of the screen. Or, try your
state's government Web site. Search for appraisers or appraisal.
appraisers? State licensed and certified appraisers are regulated by their
appraiser state regulatory agency who enforce the Uniform Standards of Professional
Appraisal Practice as well as state and federal regulations.
lenders - what is the appraiser's role? Most appraisals in this country are
done for mortgage lenders. Most appraisers work for lenders, particularly if they
specialize in appraising homes. The appraiser's role is to provide an objective, unbiased
opinion of value to the lender. Appraisers work for the lenders, not the owners, buyers,
or sellers, even if one of them pays for the appraisal by writing a check to the
appraiser. Federal banking regulations require that the lender order the appraisal. This
was a result of regulations coming from the Savings and Loan scandals in the late 1980s.
do some appraisers have to walk through my house? Last time, they just drove by.
The type of appraisal needed for a mortgage loan depends on many risk factors, such
as loan to value, loan amount, borrower's credit, etc. The determination is made by the
lender. Some loans are made using Automated Valuation Models, with no "human"
What should I have ready when the appraiser comes to my property? No one knows your property as well as you! Make a list of all the special features, such as a remodeled kitchen or new roof, or at least tell the appraiser about them. Let the appraiser know if a nearby home was listed and sold, as sometimes sales don't show up on the local MLS or other data sources.
Can I use this appraisal for another
lender? Sometimes appraisals can be used for another lender. The original
lender must release the appraisal for use with a new lender. Also, the appraisal must be
relatively recent, typically no more than 6 months old.
Who "owns" the appraisal? The appraisal is "owned" by the client who ordered it (engaged the appraiser). If a lender ordered it, the lender owns it, even if you paid for it. If you ordered it for nonlending purposes, you own it.
If I'm paying for
the report, will you send me a copy? By federal law, you are entitled to
receive a copy of the appraisal from your lender. Unfortunately, appraisers are not able
to provide you a copy of the appraisal.
When do you need your own appraiser? When getting a mortgage loan, the lender selects the appraiser. On rare occasions, an out of the area lender will as the borrower to find an appraiser.
Property owners, buyers, and sellers, or their attorneys, often hire their own appraisers for :
What should you look for when hiring an appraiser? You need to consider the purpose of the appraisal and the type of property. Try to hire an appraiser with experience in the property type, geographic area of the property, and for similar purposes. Most experienced appraisers are state certified. A few very experienced appraisers are not state certified because they don't work for lenders.
If it is your home and lender-related such as PMI removal, select an appraiser who does residential lender appraisals in your city or nearby, and is state licensed or certified.
If it is a home and for non-lending purposes, select an
appraiser with experience in appraisals for that purpose, who has appraised similar homes
in that area (neighborhood or city). If it is for tax purposes, be sure to select a well
qualified appraiser to minimize hassles with the IRS. Using a state certified appraiser,
at the minimum, is a good idea, unless the appraiser is well known, with many years of
experience, and very knowledgeable.
How can you find a qualified appraiser? Start with a list of appraisers names. Try asking at your local bank, asking real estate agents, looking in the Yellow Pages (paper or online such as www.bigbook.com ), or appraisal association Web sites or online appraiser directories. Some appraisers have Web sites. Use a search engine such as www.yahoo.com and search for "appraisal and St. Louis" as an example.
For homes, look in the Employee Relocation Councils Appraiser list. Appraisers who do relocation appraisals (when an employee is relocating to another location and is selling his or her home) take extra time to research both listings and sales, as well as market conditions and what is needed to make your home more marketable, if you are selling your home. If you're in a rural area with very few appraisers, try the National Appraiser Registry, which lists all licensed and certified appraisers.
When you have your list, ask each appraiser about his or her experience with your property type and geographic area. For example, you inherited a small house in another state. A neighbor wants to buy it. Ask the appraiser how any homes he or se has appraised in the city in the past 3 months. Or, you need the value on your home six months ago, for estate purposes. Ask the appraiser if he or she is familiar with "retrospective" appraisals. If the appraiser sounds qualified, but you are uncertain, have him or her fax you a resume with references.
What about fees? Residential appraisal fees for homes tend to fall in a narrow price range, so I advise shopping for the most qualified appraiser who can complete the appraisal in your required time period. I don't recommend shopping for the lowest fee. In contrast, fees for other types of properties can vary widely, so be sure to get several bids from qualified appraisers.
are "MAI appraisers"? The most widely known
professional designation is the MAI designation from the Appraisal Institute. MAIs
typically specialize in income producing properties. Most don't appraise homes, but some
do. If an MAI doesn't appraise homes, he or she may have a residential specialist in the
company, or will refer to an appraiser specializing in homes. For more information, go
to the Appraisal Institute Web site at www.appraisalinstitute.org.The
Appraisal Institute has two other designations for commercial appraisers, the SRPA (which
I have) and the SREA, but the MAI is most widely known.
Some appraisal designations have requirements that go well beyond licensing, and some don't. The Appraisal Institute requires a demonstration appraisal report, more education, and an experience review before awarding its designations (MAI, SRPA, SREA, SRA, RM). Many MAIs and newer SRAs also had to pass an examination. Designations from other organizations, such as the American Society of Appraisers and the National Association of Fee Appraisers also have requirements beyond state certification. For a list of appraisal organizations, including those for agricultural and assessors, go to the list of appraisal organizations on this Web site.
How can you become an appraiser? Most new appraisers today start with a trainee license, before being hired or soon after. Typically, 90 classroom hours and passing an exam are required. Then you train under another appraiser (or company) for 2,000 hours, plus take more classes, to get your regular license. Finally, after more hours and classes, you become state certified. A few states allow trainees to set up their own businesses without working for someone else.
Getting your first appraisal job can be tough. In the past, most appraisers were trained by assessors offices or lenders. Today, most are trained by independent appraisal companies, which are often very small and reluctant to hire trainees.
For information on licensing and certification requirements, go to the Appraisal Foundation Web site at www.appraisalfoundation.org. For state requirements, call your state appraisal regulatory agency.
What if you don't agree with an appraisal? Appraisers are required to be objective real estate observers, reporters, and analysts. Ethically, appraisers cannot accept an appraisal assignment contingent on a certain appraised value, direction in value, or minimum or maximum value.
If the appraisal was done for lending purposes and you think the appraiser has missed higher sales that could have been used in the appraisal, or missed valuable features in your home such as a remodeled kitchen, contact your loan officer with specific information such as the address of a sale.
If you think fraud was involved or the appraiser was very inexperienced, lazy, or just plain stupid, contact your state appraisal licensing agency. You will need to have more than "I think the value was too low (or too high)." You need the "why" also...didn't use nearby similar homes that sold recently, missed a swimming pool, etc.
What about appraising paintings, jewelry, machinery, etc.? Because there is not enough work to support many non-real-estate appraisers, most also sell what they appraise. Look in the Yellow Pages under appraisers or the type of product, or check with the American Society of Appraisers , which is the primary professional appraisal association for non-real-estate appraisers. It also has real estate appraiser members.
What about appraising businesses? There are several professional associations for appraisers specializing in business valuation. Just as with personal property such as paintings, smaller businesses are often appraised by business brokers, who also sell businesses. Look for a business appraiser affiliated with the American Society of Appraisers or the Institute of Business Appraisers.
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