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Appraisal
FAQ
Why
is an appraisal required?
Can you increase the appraised
value of a property?
| 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.
| Can
you increase the appraised value of a property?
|
In general
you do not have much control over the appraised
value of a property. The appraiser is assumed
to be neutral, objective and capable of providing
an unbiased valuation of the property. Here
are some things you can do in the event you
believe the appraised property value is too
low:
- Review
the comparable sales used by your appraiser:
Drive by the comparable sales shown in
your appraisal and compare them to yours.
Contact your Realtor® and get their opinion.
You might be able to find sales the appraiser
missed. There might be pending sales which
will soon close. When pending sales close,
they might influence the appraised value
of your property.
- Check
the measurements of your home:
Double check the accuracy of the appraisal
report regarding square footage, lot size,
number of bedroom/bathrooms, etc.
- Find
out if any of the comparable sales were
sold under distress: A foreclosure
or distress sale in your neighborhood
can effect values. If you have evidence
that a comparable sale was a distress
sale, you might be able to get the appraiser
to ignore that sale, or adjust your appraised
value accordingly.
- Get
another appraiser: Consider
getting a second opinion--a new appraisal
by a different appraiser. In this event,
make sure you get an appraiser who is
familiar with the neighborhood.
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