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What is an appraisal?
An appraisal is the process through which a state licensed appraiser develops an opinion of value. A real estate appraisal is an unbiased estimate of value of a property. To complete an appraisal, the appraiser must perform all the required research and analysis to develop a credible opinion of value.
What is an appraisal report?
An appraisal report is the communication of an opinion of value with the supporting documentation. The appraisal report is considered the product of the appraisal process. A form appraisal report is the most common written reporting format for residential properties. However, narrative appraisal reports are written reports that can convey an opinion of value with a much wider range of supporting information on property types. Narrative appraisal reports are typically used for non-residential properties.
What does an appraiser do?
A state-licensed appraiser has been professionally trained and has completed multiple appraisal courses, which allows for the appraiser to provide an independent opinion of value for a property. The appraiser will typically complete an interior and exterior inspection of the subject property and gather all the physical attributes regarding the subject property that may add or detract value during the inspection. The appraiser will gather market data pertinent to the subject and subject’s location in order to develop an opinion of value in an appraisal report. Depending on the asset type and scope of work, the appraiser will be able to produce a credible appraisal report by analyzing comparable sales, comparable rentals, comparable land sales and construction costs.
What determines value?
There are a variety of factors that contribute to the property’s value. They include, but are not limited to, location, condition, improvements, age, amenities, market trends, and comparable sales and rentals.
How long does an appraisal typically take to complete?
For narrative appraisal reports, the typical turn time is two to four weeks. The typical turn time for residential reports is one to two weeks. The completion of the appraisal report is always subject to accessibility of the property and the availability of the subject’s property data.
What is the difference between an Extraordinary Assumptions and a Hypothetical Condition?
An extraordinary assumption is uncertain information accepted as fact. A hypothetical condition is a proposed situation that is contrary to what is known to be true on the effective date of the appraisal, but it is presumed for the purpose of the analysis.
What is the Cost Approach?
It is the valuation technique in which appraisers add land value to the depreciated value of improvements to estimate the subject’s value. This approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land.
What is the Sales Comparison Approach?
It is the analysis of historical sales, current listings, and even expired listings of similar real properties in the subject’s market area. The subject property is valued by comparing similar properties that sold, currently listed or recently expired. The comparables are adjusted to the subject property and it is reasonable to assume the subject will sell for an amount similar to the adjusted sales prices of the comparable properties.
What is the Income Approach?
This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied as appropriate. This approach is widely used in appraising income-producing properties.