Most states require that real estate appraisers are state licensed or certified. The state licensed or certified appraiser is trained to render an unbiased opinion based upon extensive education and experience requirements. To become licensed or certified, appraisers must fulfill rigorous education and experience requirements. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


How are appraisers certified?   Back to top
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to take continuing education courses in order to keep the license current.
 

Who do appraisers work for?   Back to top
Typically, appraisers are employed by lenders to develop and report an opinion of value of the real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.


Where does an appraiser get the information used to develop an opinion of value?   Back to top
Gathering data is one of the primary roles of an appraiser. Data can be divided into Specific and General. Specific data is gathered from the building itself. Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product. And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.


Why do I need a professional appraisal?   Back to top
Anytime the value of your building or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your real property, an appraisal helps you set the most appropriate value. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A commercial property is often the single, largest financial asset anybody owns. Knowing its true value means you can the right financial decisions.


What exactly is PMI and how can I get rid of it?   Back to top
PMI stands for Private Mortgage Insurance. It insures a lender against loss on homes purchased with a down-payment of less than 20%. Once equity in the home reaches 20% you can eliminate the PMI and start saving immediately. For a detailed discussion of PMI and how to get rid of it click here: What is PMI and how to get rid of it.


How do I get ready for the appraiser?   Back to top
The first step in most appraisals is the physical inspection. During this process, the appraiser will come to your building and measure it, determine the layout of the rooms inside, confirm all aspects of the building's general condition, and take several photos of your building for inclusion in the report. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the building. Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure that the appraiser can easily access items like furnaces and water heaters.

The following Items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

What is ''Market Value?''   Back to top
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.


Who Actually Owns the Appraisal Report?   Back to top
In most real estate transactions, the appraisal is ordered by the lender. While the home buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The home buyer is entitled to a copy of the report - it's usually included with all of the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the property owner can use the appraisal for any purpose.


Which building renovations add the most to the price?   Back to top
The answer to this is different depending upon the location of the property. Different markets value amenities differently. Adding a central air conditioner in Houston, Texas may add significant value, while putting one in a building located in Buffalo, New York might not have much impact.

As a rule, the most value returned from renovating a building comes in the percent of area buildout, quality of construction, and quality of materials used.