An appraisal is an opinion of value at a certain point in time.
An opinion of value has many meanings. For instance, there are many different types of values such as Market Value, Investment Value, Special Use Value, as well as others. Discussing your valuation matter with an appraiser at the beginning of an assignment will help to determine what type of value is needed to solve your real estate matter.
Cost may be an accomplished fact or an estimate. It does not necessarily equal value. Price refers to a transaction price and implies an exchange. Price is a fact.
It is unethical for any appraiser to accept an assignment contingent upon developing or reporting predetermined results. Furthermore, it would be unethical for the appraisal to be based on a requested minimum valuation, a maximum valuation, or a specific valuation.
If you mean “Who can influence the outcome?” the answer is no one. Professional ethics demand the same outcome — an unbiased, independent and accurate appraisal — no matter who orders or pays for it. Furthermore, an appraisal is confidential, and it would be unethical for the appraiser to discuss any appraisal conclusions with anyone other than the client, unless otherwise instructed.
You don’t need an appraisal if all you need is a rough ballpark estimate. You can get that from a neighbor, the newspaper, your banker or a friend. However, if you need an accurate opinion of value in order to make a buying or selling decision, insuring a property, to finance a property, when appealing property taxes, in the process of legal matters, settling a lawsuit or divorce, or involved in bankruptcy, dissolution, or other litigation, you need an appraisal. In other words, if you need a reliable opinion of value an appraisal a must.
Per The Uniform Standards of Professional Appraisal Practice (USPAP), the reporting of an appraisal falls under one of two categories: an Appraisal Report or a Restricted Appraisal Report. It is important to understand the differences between the two on order that the correct option is selected for your appraisal. Additionally, it is just as critical to receive the type of report that you intended to acquire to begin with.
An appraisal report is the tangible expression of the appraiser’s work which is normally communicated via a narrative report. The Appraisal Reports presents a summary of information and analyses which provides the reader with a comprehensive level of understanding of the subject property, area information, data and valuation analysis. This is the type of report commonly used for court purposes, complex issues, and matters where the client feels it is imperative to have as many details as possible.
A Restricted Appraisal Report is used to present the minimal amount of information usually express via a written document. The development of the appraisal is typically the same for this type of a report as compared to an Appraisal Report, thus the opinion of value would coincide with the reported results of an Appraisal Report. The Restricted Appraisal Report limits the use of the report to the client, and parties unfamiliar with the subject property may not understand the opinions and conclusions of the report without reviewing the appraiser’s work file.
An appraiser may communicate assignment results with an Oral Report when the needs of the client do not require a written report. After commutating an Oral Report the appraiser must keep a summary of the Oral Report and all notes and data relevant to the assignment in the appraiser’s workfile. The development of this type of appraisal is typically the same as compared to an Appraisal Report, thus the opinion of value would coincide with the reported results of an Appraisal Report.
The purpose of the review appraisal is to confirm the data contained in another appraisal report and to review appraisal compliance with USPAP. As part of the review an opinion is normally provided regarding the completeness, adequacy, relevance, appropriateness and reasonableness of the data and opinions presented in the appraisal under review. A fancy looking report does not always equate to a technically correct appraisal. To ensure you are getting quality work, an appraisal review is your best bet.
An appraisal is an opinion of value. A survey determines the property lines of a parcel of land and will indicate structures situated on a property, easements and encroachments, and building setback lines. Most boundary surveys are performed by licensed surveyors.
It is important to periodically review your insurance coverage to determine if you are adequately insured. Determining your property’s estimated replacement cost is important because this will determine whether or not you will have enough insurance proceeds to benefit you in the case of a catastrophe. The replacement cost is often not equal to market value, the purchase price or the outstanding balance of a loan. Also, replacement cost does not include the value of land. It is important to have a professional estimate replacement cost to make sure all items are accounted for which would include recent remodeling or additions. Having an independent estimate made of the replacement cost of your building improvements will give you peace of mind when an insurance company wants to underwrite your improvements for a specific amount. We handle this type of service and would be pleased to discuss specifics regarding this matter.
An appraisal is an opinion of value. An inspection is an examination of the physical structure and systems, from the roof to the foundation. Appraisers will make a limited visual observation of your property whereas an inspection will be more invasive and will involve the testing of items such as plumbing, electrical, and mechanical systems as well as a detailed analysis of the other components that make up the building.
Highest and Best Use is defined as the reasonably probable and legal use of a property that is physically possible, appropriately supported, financially feasible, and that results in the highest value.
The appraiser considers many sources of data including the Multiple Listing Service (MLS), Xceligent, Loopnet, interviewing buyers and sellers, interviewing real estate agents and property managers.
The cost of an appraisal varies significantly by the scope of work, complexity of the assignment, difficulty of the job, intended use and client requirements. Always remember that expertise, integrity of research and using updated data comes with a price tag. There are always less expensive appraisal options which usually lack items needed. We are always happy to provide a fee quote. Just give us a call.
The valuation process involves the following seven steps: definition of the problem, preliminary analysis and data selection and collection, highest and best use analysis, land value estimate, application of the three approaches as warranted, reconciliation of value indications and final value estimate and report of defined value.
Scope of work includes but is not limited to the extent to which the property was identified and inspected, the type and extent of data researched, and the type and extent of analyses applied to arrive at credible opinions or conclusions. The scope of work oftentimes determines the cost of an appraisal or consulting assignment.
In an appraisal or valuation assignment, your property will be compared to similar properties within the same market area that have recently sold. This will help determine the value of your property. Usually, no two properties are alike so price adjustments are often made to reflect the difference(s). Comparable sales are used in the sales comparison approach which assumes that an informed purchaser would pay no more for a property than the cost of acquiring another similar existing property having the same utility.
Competitive listings are similar properties which are currently on the market, and usually reflect the upper limit that a market participant will pay for a particular type of property.
It is not uncommon for appraisers to disagree on value. However, two technically correct and well researched appraisals should have a reasonable range of disagreement. Items to question between two appraisals having different values include effective date of value and whether or not there were any market changes that occurred between the effective dates of value, appraiser experience, market research performed and geographic competency. Keep in mind that two appraisers can look at the same property and have different viewpoints. For a less complex property, if the range in value is 10% plus or minus, or for a more complex property if the range in value is 15% plus or minus, there is a good chance both opinions of value are reliable. If the variation is greater than that, a professional reconciliation between the two appraisals would be warranted. We handle this type of assignment, and if necessary can assist you with a third appraisal.
Of course! If hired, we will always represent your best interests by showing you properties that benefit you.
Brokerage and leasing commissions vary by job and are best determined after discussing your needs and the amount of time that would be required to complete the job to your satisfaction. Please let us know your needs so we can discuss fees.