Frequently Asked Questions

The Appraiser is a State Credentialed Person trained in discerning the worth of a property. An appraiser makes an unbiased and professional opinion on the value of a property and presents their professional investigation in appraisal reports.

Typically, an appraiser needs to document the condition of the property, both inside and out, from the layout and features to the degree of modernization, including any updates as well as the overall quality of construction. This information will help to assist the appraiser throughout the valuation and comparison process.

The appraiser estimates the square footage (GLA - gross living area), by measuring the exterior of the home ahering to ANSI Z765 standards as required by Fannie May. Non-living areas, such as garages or covered porches, aren't included in GLA, but are accounted for and considered and valued separately. Finished basements are also calculated separately from the above-ground GLA. The local market will dictate the contributory value of the finished basement, which can be influenced by governmental regulations, the degree of modernization, the quality of the finish, and other factors.

The appraiser will generally consider only permanent fixtures and real property. Because many above-ground swimming pools and some small sheds are not permanent structures, they typically aren't included in the valuation. Depending on the specific installation process and local custom, however, an above-ground pool or small shed might be considered part of the real property.

A Real estate appraisal, property valuation or land valuation is the process of developing an unbiased opinion of value for real property (usually market value, though there are other values such as Historical Value, Insurable Value and Investment Value). Lenders order appraisals to ensure the value of the collateral for the mortgage loan.

Each report must reflect a credible estimate of value and must identify the following:

• The client and other intended users.
• The intended use of the report.
• The purpose of the assignment.
• The type of value reported and the definition of the value reported.
• The effective date of the appraiser's opinions and conclusions.
• Relevant property characteristics, including location attributes, physical attributes, legal attributes, economic attributes, the real property interest valued, and Non real estate items included in the appraisal, such as personal property, including trade fixtures and intangible items.
• All known: easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
• Division of interest, such as fractional interest, physical segment and partial holding.
• The scope of work used to complete the assignment.

Our most common request for appraisals are for mortgage financing, however there are a number of other instances where appraisals may be ordered.  In the dissolution of a marriage, an appraisal is often necessary to determine the value of the real estate that will be divided as part of the settlement. Other common requests for appraisals include pre-listing appraisals (establishing a current market value prior to listing) Contesting property taxes, lawsuits, and Trust/Estate settlements.

Appraisers must meet an education requirement and acquire a minimum of 1,000 hours of experience under the direct supervision of a Certified Appraiser. Appraisers must also pass a state exam to gain licensing. The continuation of education and completion of additional certifications are required to become a Certified Appraiser. There are two types of Certification, Certified Residential and Certified General.

Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;
2. both parties are well informed or well advised;
3. a reasonable time is allowed for exposure to the open market;
4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Value improvement is a very common question asked of an Appraiser in the field.  Most often homeowners already know the answer! When looking around your home think about the things that you would most want to change. Potential buyers are often looking to make the same improvements. Think big and work your way down. Thinking big to a homeowner should mean addressing the main components: Roof, Windows, Siding, HVAC, Kitchens and Baths. These main components are often the most costly items to replace but by improving energy efficiency, aesthetics and function, the homeowner will see the highest improvement in value. Once these areas are up-to-date and efficient turn your attention to cosmetics.

Appraisal Associates will call you to schedule an appointment time. It is best to have any pets secured. Even the most loving dogs can become scared, confused and intimidated by an appraiser’s laser measuring device, tape measure or camera. For the safety of the appraiser, and to avoid liability, it is best to contain or remove pets for the duration of the inspection. Inspections can last from 30 to 60 minutes depending on the property. On site time is generally 30-45 minutes, longer for complex properties, hobby farms etc. The Appraiser will measure the exterior of the home and any outbuildings on the property. It is important that the Appraiser is given access to all buildings on the property as most clients require interior and exterior photos of any structure that contributes to the value. Once the appraiser has measured and observed the buildings they will then view the interior of the home. At the conclusion of the observation, the appraiser may ask several questions including the age of the main components and ask for a description of any home improvements. Having a list of improvements ready for the appraiser is always welcomed and helpful.

An appraisal is based on a specific date and for a specific client which is identified in each report. If a lender orders an appraisal for a lending decision, the lender is the client. Homeowners, at times,  will call the Appraiser directly to discuss results of an appraisal. Some homeowners will become upset when told the restrictions prohibiting an Appraiser from discussing the results from an assignment. The engaging client can only answer questions regarding an appraisal, unless the Appraiser has direct permission to discuss the results.

Simply put, an appraisal is an opinion of value based on current market analysis. A home inspection is a report of the condition of the home/improvement. The Appraiser is NOT a home inspector and a home inspector is NOT an Appraiser. Each has a different scope of work, guidelines and purposes.

The Cost Approach is used primarily when developing a value for a new, or almost new home. This approach considers the current building costs provided by the builder and/or national Cost Services, such as DwellingCost or Marshall and Swift residential cost services. The cost approach estimates the price a buyer should pay for a piece of property is equal the cost to build an equivalent building. In the cost approach, the property's value is equal to the cost of land, plus total costs of construction, less depreciation. It yields the most accurate market value for when a property is new than through alternative methods.

The Sales Comparison Approach. This Approach is really where the majority of an appraiser’s time is spent. The term sales comparison approach refers to a real estate appraisal method that compares one property to comparables or other recently sold properties in the area with similar characteristics. Real estate agents and appraisers may use the sales comparison approach when evaluating properties to sell. This method accounts for the effect that individual features have on the overall property value. In other words, the total value of a property is the sum of the values of all of its features.

The Income Approach. The income approach for real estate valuations is similar to the discounted cash flow (DCF) for finance. The income approach discounts the future value of rents by the capitalization rate. When using the income approach for purchasing a rental property, an investor considers the amount of income generated and other factors to determine how much the property may sell for under current market conditions. In addition to determining whether the investor may profit from the rental property, a lender will want to know its potential risk of repayment if it extends a mortgage to the investor

Appraisal are unique to each property therefore there is no set-in-stone fee. The type of property to be appraised, scope of work involved and distance travelled are all considered when arriving at an appraisal cost.