A real estate appraisal is the process of providing a value of real property for sellers, buyers, lenders, investors, property managers, and others. The determined value is defined as the appraiser's professional opinion of value. Real property is defined as land, and anything permanently attached to it. For residential properties, this normally means a house, but also includes other structures such as garages, storage facilities, carriage houses, additional living quarters, pools and pool houses, decks, patios, and porches.
The first phase of the appraisal is the physical inspection of the property and structures by the appraiser.
The second phase of the appraisal is the collection of data about the subject property to be appraised. This includes legal data, such as block/lot, owner, property taxes, and lot size. Data on the local housing market, including sales statistics and economic trends, are also collected.
The third phase is to analyze this data, formulate conclusions, and develop an opinion of value. Methods used for doing staistical analysis and drawing conclusions are recognized and approved by regulatory authorities, state appraisal boards, government entities, and industry organizations.
The fourth phase is communicating the results to the appropriate person or persons. This is done by either putting the information into a form, or by creating a written narratve report, which is similar to a book. The form format is commonly used on residential properties while narrative reports are typically used on commercial properties. The report is then sent, usually by electronic transmissions, or sometimes by regular mail or hand delivered.
Please click on the next FAQ for a more detailed explanation on all aspects of the appraisal process.
The Appraisal Process
The art of performing an appraisal can be broken into four basic parts, as follows:
1) Physical Inspection:
- The following tasks are performed during an on-site inspection of the property
- Exterior inspection of the grounds, including pools, decks, patios, other structures
- Taking measurements of all buildings including the main home to determine square footage
- Interior inspection to gather data on room count, building materials, quality, condition, features, recent updates, and all information necessary in valuing the home
- Taking both exterior and interior photos
- Conversing with the property owner to address any questions or concerns, and for the owner to inform the appraiser of property details that might not be obvious
2) Research and collection of information:
- In addition to data collected from the on-site inspection, various sources are searched for additional property data as well as specific market data. These sources can include:
- Government websites for legal information, property sizes and characteristics, sales data, and market trends
- Multiple Listing Service (MLS) data for recent neighborhood sales data, listing information, and market trends
- Web sites, local newspapers, and other publications for sales and marketing data
- Tax and flood maps for accurate property location and characteristics
- Tax assessors, sales agents, and property managers
3) Analysis of data:
- After all necessary data is collected, the appraiser organizes and analyzes the data using techniques recognized and approved by industry leaders and government authorities to arrive at a value conclusion. Appraisers are required to adhere to Uniform Standards of Appraisal Practice (USPAP), the source of appraisal standards from The Appraisal Foundation.
4) Reporting Conclusions:
- After all analysis are finished and a value conclusion is determined, a written report with the final conclusion is sent to the client, usually be email.
All real estate appraisers must be licensed by the state appraisal boards in the states they serve. Intensive education and training must be undertaken before an individual can become a licensed appraiser. After these have been completed, the individual must pass a state exam.
Residential appraisers have 3 licensing categories:
Trainee-must work under the supervision of a licensed appraiser.
Licensed Residential Appraiser-can perform appraisals on 1-4 family properties valued under $1 million and are considered non-complex assignments.
Certified Residential Appraiser-can perform appraisals on 1-4 family properties with no limit on value or complexity. This is the highest designation attainable by a residential appraiser.
Any appraiser assigned to do your appraisal by Absolute Value Appraisal Network is a Certified Residential Appraiser. We do not use trainees or residential appraisers without the Certified designation.
In order to become a Certified Residential appraiser, the following minimum requirements must be met.
Step 1, Education:
200 hours of specific industry related classes administered by a state approved school must be taken. A course on USPAP, The Uniform Standards of Professional Appraisal Practice, is mandatory. USPAP defines the rules of competency, ethics, and professionalism that all appraisers must adhere to.
Step 2, Training:
An individual must work as a trainee and acquire a minimum of 2500 hours of experience in no less than 2 years.
Step 3, State Exam:
An individual must pass a state exam that measures the trainee’s knowledge and ability.
In addition, an individual must have an Associates Degree or higher from an accredited school of higher education. Required courses include Economics, Finance, Statistics, and Algebra, Geometry or Higher Mathematics.
Required Continuing Education:
Appraisers are required to take 28 hours of additional courses every 2 years, including a 7 hour USPAP course. This makes appraisers aware of new regulations, reinforces existing ones, and keeps appraisers up to date on current methods and procedures.
The appraiser needs access to all rooms in all buildings on the property, including basements, attics, and accessory buildings (garages, garage apartments, carriage houses, pool houses, etc.) The appraiser must be able to ascertain what types of room exist, such as kitchens, bedrooms, baths, as well as their condition (finished, unfinished, etc.) If you have tenants or family living in the building, please let them know in advance the day and time the appraiser is scheduled to inspect the property, and that the appraiser will need to have access to all rooms.
Documents such as a property survey, deed, recent tax bill, or estimate for repairs are not required. but are often helpful and can be shown or copies given to the appraiser at the time of inspection.
The physical inspection of a property and home typically takes 30 to 60 minutes. In the case of large, unusual, or complex properties, the inspection might take longer. Based on a description of your home, we can estimate the time needed in advance, so you can prepare for the rest of your day.
In most cases, the report is finalized and sent to you within a week after inspecting the property; quite often it is sent earlier, within 3-5 days. If there are any delays, usually due to complex assignments or unusual circumstances, we absolutely will keep you informed. If you need the report in a rush, please let us know in advance and we will do everything possible to accommodate you.
The industry standard and most commonly used method to deliver the appraisal report is by electronic transmission as a PDF document, most often sent by email. PDF reports are signed electronically by the appraiser, password encrypted, completely legal, and accepted in courts of law. This also allows you to print as many copies as you like, share it as needed, and to keep the appraisal permanently stored on a computer, disk, thumb drive, or backup system.
For those who don't have a computer or printer and need a hard copy, we can print and mail the report to you. In order to cover printing, packaging, and postage costs to mail the report to you, there is an additional fee for this delivery method. Please refer to the fee page for pricing.