The Real Estate Appraisal Process: What You Need to Know
In many cases, the most significant investment an individual or organization can make is the purchase of real estate. Whether you are thinking of buying a home, in need of a mortgage loan or looking to get your home insured, getting an accurate real estate appraisal will be a vital part of the process.
Other important reasons that people need real estate appraisals include:
- assess or reassess property tax values
- confirm the accuracy of sales prices for potential property buyers
- help settle a divorce or an estate dispute
- help set a fair market price for a property that is about to be put up for sale.
Real Estate Appraisers
Appraisers must meet the licensing and certification requirements that are mandated by each state. While the exact requirements vary slightly by state, a certification course will include classes, apprenticeships and examinations to ensure that real estate appraisers understand the factors that affect property values.
The certification for an official appraiser is general, yet most appraisers and real estate appraisal offices will specialize in one type of property or another. For example, while a real estate appraisal firm may specialize in commercial property and golf courses, the firm is still able to appraise a home (though they would likely choose not to).
The Real Estate Appraisal Process
Generally speaking, an appraiser will make several visits to the property being appraised. The appraiser has his or her eye out for characteristics that affect the value of the property, documenting the presence of these features with photographs.
Some of the factors that affect property value and that appraisers will, therefore, photograph include:
- aesthetic appeal of building
- available parking (especially for commercial properties)
- condition of the roof and foundation
- existing landscaping
- location (i.e. ocean views, freeway proximity, etc.)
- recent renovations
- size of property
- views from building and/or any yard space.
Appraisers will also note the property's surrounding neighbors, as noisy neighbors (such as a nearby bar or train station) can also affect the appraisal value.
In addition to visiting the property, a good real estate appraiser will review all documentation of the property, including:
- building permits
- lease agreements and records
- previous appraisals
- recent purchases.
All this information is compiled into a very detailed report that states the dollar value of the real estate. This report also documents the appraisal process and other factors that helped the appraiser reach the determined value.
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Real Estate Appraisals for Home Insurance
Home insurance appraisals estimate the value of your home (and the valuable items within in it) to provide adequate coverage in the event that your home is damaged. In many homeowners' insurance policies, items that are specifically appraised and listed in the policy will be covered by insurance should some unforeseen disaster destroy your home and valuables. As a result, getting a accurate appraisal of your home is vital in case you need to collect on your homeowners' insurance to rebuild your home. |
Online Real Estate Appraisal
Many homeowners are interested in getting a ballpark figure of the value of their homes before committing to an official contract with an appraiser.
The Internet has revolutionized many industries, including that of real estate appraisal. While an official appraisal is required for insuring, buying and getting loans for homes, homeowners can get an idea of the value of property by doing a little bit of online research.
How to Find an Appraiser
Because real estate appraisal firms will specialize in different kinds of properties (as previously mentioned), be sure that your appraiser has experience in the type of real estate you want appraised.
Another key issue to consider when choosing an appraiser is locality. A real estate appraiser should be very familiar with the area where the property is located. This also makes it easier for the appraiser to make multiple visits to the property, if necessary.
A good place to start researching appraisers in your area is the Appraisal Institute, a membership organization with over 23,000 members from around the world. You can also research your state government's Web site on real estate appraisal certification. Government Web sites will have links to different agencies and possibly a directory of certified appraisers.
Resources
U.S. Department of Labor, Bureau of Labor Statistics (2007).
Appraisers and assessors of real estate. Retrieved March 21, 2008, from the U.S. Department of Labor, Bureau of Labor Statistics Web site:
http://www.bls.gov/oco/ocos300.htm.
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