Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property (usually market value). Real estate transactions often require appraisals because they occur infrequently and every property is unique (especially their condition, a key factor in valuation), unlike corporate stocks, which are traded daily and are identical (thus a centralized Walrasian auction like a stock exchange is unrealistic). The location also plays a key role in valuation. However, since property cannot change location, it is often the upgrades or improvements to the home that can change its value. Appraisal reports form the basis for mortgage loans, settling estates and divorces, taxation, and so on. Sometimes an appraisal report is used to establish a sale price for a property.
Besides the mandatory educational grade, which can vary from Finance to Construction Technology, most, but not all, countries require appraisers to have the license for the practice. Usually, the real estate appraiser has the opportunity to reach 3 levels of certification: Appraisal Trainee, Licensed Appraiser and Certified Appraiser. The second and third levels of license require no less than 2000 experience hours in 12 months and 2500 experience hours in no less than 24 months respectively.
If the appraiser’s opinion is based on market value, then it must also be based on the highest and best use of the real property. In the United States, mortgage valuations of improved residential properties are generally reported on a standardized form like the Uniform Residential Appraisal Report. Appraisals of more commercial properties (e.g., income-producing, raw land) are often reported in narrative format and completed by a Certified General Appraiser.
How Is an Appraisal Conducted?
It’s quite simple, and the entire inspection process usually takes less than an hour. One of our friendly Appraisers will walk through your home and the surrounding site area, noting anything that can contribute or adversely affect your home’s value. This will depend on a number of variables.
For example, if your home has a swimming pool, but swimming pools aren’t popular in your area it could either not affect your property value or even detract from it. However, if your home is close to a highly-rated school or a desirable attraction, that could be a huge plus for its value.
As they conduct the appraisal, your Appraiser will visually inspect, sketch the subject’s floor plan and take pictures of the property. The appraiser will ask about any recent updates or renovations. Suggestions can be made to increase value or make the subject more marketable. This will give you a chance to address them before moving forward with your real estate endeavor.
Once your Appraiser is finished with the appraisal inspection, you should have your final report within two business days.
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