Why is an appraisal required?
An appraisal is an estimate of the value of a property. An
estimate of the value of the property generally refers to its fair
market value. The purpose and use of appraisals include transfer
of ownership, financing and credit, taxation, condemnation,
insurance and many others.
An appraiser is typically a state-licensed individual trained
to render expert opinions concerning property values.
Authorized by Congress, The Appraisal Foundation sets minimum
standards for licensed appraisers. The Foundation is the parent
organization of the Appraiser Qualifications Board (AQB). States
are required to implement appraiser certification requirements
which are at least as rigorous as those issued by the AQB.Certified
General Appraiser and Certified Residential Appraiser.
The AQB has issued criteria for the Certified General Appraiser
and Certified Residential Appraiser. Each has education,
experience, examination and continuing education requirements.
Consider working with either a Certified General or Certified
Residential Appraiser.
The appraiser considers three approaches to value when arriving
at an opinion: sales comparison approach (formerly the market data
comparison approach), cost approach and income capitalization
approach. When evaluating single-family, owner-occupied
properties, the sales comparison approach is most heavily weighted
by an appraiser. This approach compares the subject property with
other similar properties in the vicinity which have sold or are
for sale. Real estate professionals also rely heavily on this
approach.
Real estate agents approximate the appraisal process by
conducting a Comparative Market Analysis (CMA), using the sales
comparison approach to value. The accuracy of the agent's
appraisal depends on the experience and skill of the agent. The
CMA is not an officially recognized appraisal.
Most lenders will not lend money without an acceptable
appraisal. You can be sure you are getting an expert appraisal
when the appraiser is licensed or certified and is governed by the
Competency Provision of the Code of Ethics of the Uniform
Standards of Professional Appraisal Practice (USPAP), proclaimed
by the Appraisal Foundation. |
