RESIDENTIAL REAL ESTATE APPRAISER
Purpose
Responsibility
Expertise
Market Approach
Advantage
Steps
Summary
PURPOSE - The purpose of the Appraiser is to estimate the market value of the real estate property identified in the assignment.
RESPONSIBILITY – it is the responsibility of the Appraiser to keep his/her education requirements current, follow Fannie Mae guidelines, and estimate the market value of the real estate identified in the assignment. It is also the responsibility of the Appraiser to be knowledgeable of the assignment and possess the necessary experience and resources to perform the assignment - in a professional, unbiased, independent and objective manner.
EXPERTISE – appraisers develop their expertise through licensing requirements, continuing education, research, developing resources, and performing appraisal assignments.
MARKET APPROACH – The market approach of determining the cost of the property is most commonly used. The typical terminology used in Appraisal language is called the “Sales Comparison Approach”. The appraiser looks at the subject property with respect to similar properties (called comps) that have sold in the immediate area. This approach looks at the “Market” area of the subject property and finds properties directly related to the features of similar, competitive properties. The appraiser then compares physical characteristics and makes monetary adjustments for each comp to bring it more in line with the other property. An example would be if a property has one less bathroom than the subject property, then the sales price of the comp would be adjusted up by $5,000 (for example purposes only) to bring both properties in line with each other.
ADVANTAGE – There are many reasons for taking advantage of contracting good, professional, experienced Appraisers. The most important would be to provide accurate and timely appraisal results and good communication skills when writing an appraisal. This prevents rebuttals from the underwriters. In addition they want to ensure appraisal fees are economical for their clients.
STEPS – The assignments for performing appraisals, such as refinancing or home purchases, are generally ordered by the Lender or Mortgage Broker. Rarely is it customary for the borrower or seller to request an appraisal unless it is for their own use.
The Appraiser will then make an appointment to have access to the subject property to perform the actual appraisal inspection. Prior to the physical inspection, it is customary for the appraiser to complete most of the research on the property and locate similar comparables in the immediate area.
Appraisal fees are usually collected by the Appraiser from the borrower at the time of inspection.
Upon completion of the physical inspection, the appraiser will further research comparables choosing most similar and most recent comparables to develop the “market value” of subject property. The Appraiser is required to confirm sales information with the listing agent making adjustments for condition and concessions.
Reports should be completed and forwarded to lender/client within 24 to 72 hours of inspection for most assignments depending on difficulty, size of property and availability of comparables. The borrower is entitled to a copy of the appraisal from the lender/client but the Appraiser is not authorized to forward a copy to borrower.
SUMMARY - the purpose of the appraisal is to estimate the market value of the real estate identified in the assignment. They are ordered by the Mortgage Broker or Lender, but they are also contracted by lawyers or family members for the purpose of establishing the value of a home for the settlement of an estate – the settlement of an estate – date of death of a home owner or individuals in divorce settlements to establish the market value of a home as part of divorce settlements.
In all situations, it is required that the Appraiser be knowledgeable of the assignment and possess the necessary experience and resources to perform the assignment in a professional, unbiased, independent and objective manner.