Real Estate Appraiser
The job of the real estate appraiser is to analyze and estimate the current market value of a particular parcel of real estate at a given moment in time. The estimated value takes into account the land, all dwellings and any features found on the land. Appraisers estimate the value of real property for a variety of purposes, such as determining a sales price, assessing property taxes, or determining the amount of a mortgage a lender might be willing to approve to purchase the property.
Additionally, there are many other reasons people use real estate appraisers, including:
- Establishing value to buy insurance.
- Settling insurance claims.
- Establishing market value to sell a home or buy new property.
- Establishing market value to refinance or use for collateral on another loan.
- Assessing current value in order to get rid of the obligation to buy property mortgage insurance. (If the value has risen enough, the owner’s percentage of equity in the property may have increased to the point that the lender’s requirement to pay for property mortgage insurance can be eliminated).
- Reducing property taxes. (If the market value of the property value has decreased since the county tax assessor last valued it).
- Settling an estate (to be dispersed to heirs or sold).
- Establishing market value for the division of assets in case of divorce
- Establishing market value in order to dissolve a partnership or corporation.
- Conducting a right-of-way or easement appraisal. (If the owner must sell a piece of land for road widening or to grant an easement, an appraiser can make sure they are paid the fair current market value).
- Business appraisals for the purchase, liquidation, financing or estate tax settlement purposes.
Real estate appraisals are derived by using one or all of three common approaches:
- The Cost Approach is used to estimate what it would cost to replace or reproduce the improvements to the property as of the date of the appraisal, less any physical deterioration, functional obsolescence or economic obsolescence. The remainder is added to the land value.
- The Comparison Approach (“comps”) uses other “bench mark” properties of similar size, quality, age and location that have recently sold in order to derive a current estimate of value for the subject property. A comparison between the subject property and those recent sales is made to adjust the value to determine the current value of the property.
- The Income Approach is of primary importance in ascertaining the value of income producing properties and has little weight in residential-type properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the subject property produces.
Remember, real estate appraisers must be state-licensed and certified.
Professional affiliation is also available with the National Association of Independent Fee Appraisers, which offers a professionally recognized testing and certification program so that the general public can be reasonably assured of the appraiser’s professional expertise, integrity and responsibility.
Some other credentials to look for include membership in IFA, IFAA (agricultural member), IFAS (senior member) or IFAC (appraiser-counselor).