Frequently Asked Questions: The following FAQ’s will help appraisers, consumers, lenders and clients with answers to common questions.
Appraisal fees are based on the complexity of the appraisal, not the value of the property. Fees are never based on a percentage of the value of the property appraised. Appraisal fees are established by each firm. In evaluating the cost of an appraisal, consideration should be given to the experience of the firm / the appraiser, the quality of their appraisal and their reliability for performance. The cheapest appraisal may not be the best or “lowest cost” appraisal.Permalink
Time of year can affect the market. Rise or fall in interest rates can affect the market. The stock market can affect changes in our economy. The unemployment rate can affect jobs. And, so can the weather. These are the reasons that lenders require appraisers to provide the most current market data available.
For these reasons, there is no hard and fast rule as to how long the value estimate is good for. The best advise would be to use the analysis as soon as possible.Permalink
The appraiser is NOT a home inspector, engineer, architect, electrician, plumber, H.V.A.C. technician or contractor. The appraiser briefly walks through the house to get an idea of the general condition and room count. An appraisal is not a guarantee of condition. The appraiser will ask about any visible problems and those which may not be visible, and will do his/her best to gauge any impact on value attributable to those problems. You are encouraged to seek the advice of experts if you have any questions about the structural or mechanical aspects of a property.Permalink
What is the difference between a short form report and the more commonly used and traditional Fannie Mae/Freddie Mac (URAR)?
The URAR report is relied on primarily by the primary and secondary mortgage lending market. It contains many items and requirements that are not necessarily required in order to estimate value. Both reports rely primarily on direct sales comparison (market approach) with a market grid to determine the value of the subject property. Short form reports are well suited for tax appeal, gift and estate tax purposes, helping a seller price a home, assisting a buyer in determining what price to offer or pay for a home, uncontested divorce proceedings and most any other potential use other than for obtaining a mortgage or in litigation where the report will be used in conjunction with expert testimony.
**Access to property and flexibility to work around appraiser’s schedule is required for 24 hour turn around. Appraisal report is sent electronically. Permalink
Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request. In the residential appraisal process, the homeowner should understand that the appraiser's client is not the homeowner, but rather the lender or financial institution that hired the appraiser. The appraiser has no obligation to provide a copy of the appraisal to the homeowner - even though they may be directly or indirectly paying for the appraisal. The appraiser is bound to professional standards and a code of ethics, which does not allow the appraiser to release the appraisal to any other party other than the defined user (client) of the appraisal.Permalink
Probably NOT. Licensed real estate appraisers are bound by what's known as the Uniform Standards of Professional Practice (USPAP). Within these standards are ethics rules we must abide by. One of the ethics rules deals with CONFIDENTIALITY.
The confidentiality rule states that appraisers are to provide their analysis to NO ONE except their client and a few specified other situations. So, who is the appraisers' client? [...] Read more
No. Requests for appraiser services commonly known as: comp checks, value checks, pencil searches, look-ups, preliminary evaluations, study, analysis, etc. are in fact "appraisals". Any time that a licensed, or certified appraiser expresses an opinion of value, a value range, a relationship such as more than or less than, or even selects a range of comparables, it is an "appraisal".
Appraisers must [...] Read more
Just how much any particular individual improvement might add to your home's market value, what appraisers typically call the contributory value, can often vary widely from market to market, dictated by the wants and needs of each neighborhood. However, a local appraiser familiar with your market can help you figure out the best home-improvement value. Check out the online Remodeling Cost vs. Value National Data which features some information on how improvements might increase the value of your home from market to market.Permalink
Because much private, corporate, and public wealth lies in real estate, the determination of its value is essential to the economic well-being of society. It is the job of the professional appraiser to determine these values by gathering, analyzing, and applying information pertinent to a property.
Unquestionably, the professional opinion of the appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, this professional serves as a vital "check in the system," protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.
Essentially, an appraisal is a conclusion of worth derived by research into the law of probability with specific focus on real estate. Based on education, training, experience, and integrity, an appraiser is able to forecast sellers' and buyers' of real estate activities into a calculation or estimate of market value. Due to the character and uniqueness of each property, comparisons between seemingly similar real estate often require that adjustment be made before a value conclusion is reached. But, in some cases, this is not possible and the data may be less than conclusive.
Financial consideration for real property often reflect emotions, compassion, sympathy, bias, politics, specific needs, lack of understanding, and [...] Read more
A comparable sale is a property, similar to the subject property in most respects (location, style, age, condition, etc.) that has recently sold in an arms length transaction. An arms length transaction is one in which both seller and purchaser act completely independent of each other and have no connection or relationship. The selection of comparable sales, in most cases, is the single most important factor in estimating value. It is the appraiser's responsibility to research the local market and determine which comparable sales most accurately reflect the characteristics and amenities of the subject property.Permalink
Appraised value is primarily the market value of the home. Assessed value is the value used for tax purposes.Permalink
Absolutely not! The appraiser is required to maintain confidentiality with the client, which would typically be you (if you undertook the appraisal) or the bank (in a mortgage related appraisal), not the local tax authorities.Permalink
This question is asked by many homeowners at the conclusion of an appraiser's physical inspection of the property. There are two important reasons why an appraiser typically cannot answer this:
- The physical inspection of a property is only the beginning of the appraisal process. After the inspection, data must be collected and analyzed to determine a property's estimated market value. An appraiser has no way of determining what the property's value might be until he or she analyzes all the necessary data.
- Generally, an Appraisal is ordered by a lending institution (which is considered to be the client), and although the home-owner is typically required to pay for the appraisal, the appraiser is bound by law NOT to reveal the conclusions to anyone except the client without direct permission from the client.
If you put less than 20% down towards the purchase of your home, you can safely assume that you are currently paying for a Private Mortgage Insurance (PMI). This additional premium is being paid by you with every payment to insure the lender in case you default on your loan. If you have paid your mortgage down or if your property has appreciated enough, you could have this insurance premium removed. Even if you buy your house considerably below the appraised value, you typically need 1-year seasoning on your loan. Some mortgage companies require at least 2 years. After this waiting period you can make the request. Call your mortgage company customer service and ask for full instructions for the PMI removal. Most mortgage companies want to know that you have at least 20% equity in the property. In order to determine the value most mortgage companies will require a fee based appraisal from a State Licensed or Certified Appraiser.Permalink
Many states require all real estate appraisers to be, at a minimum, state licensed or state certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation. To see the specific requirements for any state click here.Permalink
Mandatory (Man) - Certified/licensed appraisers required for any service for which an opinion of value (evaluation or appraisal) for real property is developed;
Mandatory for [...] Read more
This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.
Unacceptable Assignment [...] Read more
Can institutions use "readdressed appraisals" -- appraisal reports that are altered by the appraiser to replace any references to the original client with the institution's name?
Institutions may not use an appraisal prepared by an individual who was selected or engaged by a borrower. An institution's use of a borrower-ordered appraisal [...] Read more
If an appraiser "whites out" the client's name and the subject property address on an appraisal report, can that appraiser submit the report to a lender as an example of his or her work?
Lender's practice of requiring work samples from appraisers for consideration in the appraiser approval process began prior to the implementation of state-administered appraiser licensing and certification programs. At the time this practice was developed [...] Read more