Appraisal Education

Homeowners who are seeking a property appraiser often ask “How should I choose which real estate appraiser to use?” When selecting a property appraiser, keep the following in mind:

Always make sure a property appraiser is licensed or certified by the state to perform real estate appraisals. While state licensing and/or certification isn’t always an indication of quality, it ensures that an individual is has met certain standards and been authorized to perform property appraisals. Some states do not require licensing to perform real estate appraisals. It is unwise to use the services of any professional who is not licensed or certified.

Don’t be afraid to ask an appraiser for a copy of their license. A good appraiser will readily provide this documentation. Copies of licenses are commonly requested by mortgage brokers and loan officers. Once you get a copy of their license, it’s a good idea to check with the government agency which issued the document to ensure the license is active and in good standing.

Many excellent real estate appraisers carry a professional designation. The most widely known industry designations are SRPA, SRA and MAI. These designations are issued by the Appraisal Institute. These designations demonstrate an appraiser’s commitment to continuing education and ethical standards. Oftentimes, the standards required to obtain these designations exceed those set forth by state licensing/certified requirements. Read the rest of this entry »

What exactly is a real estate appraisal? It is simply an opinion, or estimate, of the value of a particular property. A qualified person gives an evaluation of what that piece of real estate is worth. So who is this “qualified person”? There are two trade organizations, The Appraisal Institute and the National Society of Real Estate Appraisers. Both are held to incredible standards through education requirements, ethical standards, and enforcement procedures, to the point that the system is not flawless, but as accurate as possible.

Lenders require an appraisal by a person recognized by one of these two organizations to approve a new mortgage. Without this, the lender has no proof of the value of the property that they lending for. This would be a dangerous position in the event of foreclosure. The appraisal attempts to justify the price of the property to the lender, and it usually happens after the buyer has made a contract with the seller. If you have noticed “pending inspection” listed on certain MLS properties, this is the stage that is taking place. Before the lender proceeds, he or she is given the contract price.

There is a standard Uniform Residential Appraisal Report that most residential appraisals appear on. However, reports can be oral, written, narrative, or letter in style. The residential report from meets the requirements of most lenders in primary or secondary markets. The subjects covered in this report are the site, neighborhood, property improvements, interior finish, appliances, equipment, an evaluation that includes the methods of appraisal used, and a market data analysis comparing similar properties in the neighborhood. Attached are photos of the property to provide examples of such things mentioned in the form as well as several views of the property and a map of its location. Read the rest of this entry »

MAI appraisals are among the most sought after appraisals in the commercial real estate world. MAI stands for Member of the Appraisal Institute, a trade organization which monitors appraisers and holds them to a higher standard than appraisers who are merely licensed and do not belong to such an organization. There are other appraisal trade organizations active in the world of real estate. However, MAI is the best known, and thus the most popular.

Technically, there is no such thing as an “MAI appraisal.” There are only appraisals performed by an appraiser who has completed the MAI Appraisal Institutes class offerings, and holds this designation. However, it’s often much easier to refer to the appraisal itself as being certified than to hold to technicalities.

An appraiser who has earned the MAI designation is qualified to and experienced in the performance of both residential and commercial properties. Many other appraisers are only qualified for residential property. At one point, lenders were likely to require that an appraisal be done by an MAI certified appraiser, or a member of another trade organization. However, this has been unlawful since 1989, as there is not federal regulation of these organizations. Still, certified appraisals can increase the chances of a favorable lending situation, since the lender will feel more comfortable. An MAI certified appraisal offers lenders a reliability that allows them to be confident in their investment.

A commercial appraisal by an MAI certified appraiser can include many things. Generally, it will provide an overview of the community, neighborhood, and general area in which the property is situated, as well as a detailed description of the site and all buildings it contains. Zoning analysis, an analysis of the highest and best use for the property, and an in depth discussion of the property’s value from several different approaches will also be included. The appraiser may also make a recommendation of which valuation is most appropriate in his or her opinion. Read the rest of this entry »