What is an Appraiser?
An appraiser, also called a real estate appraiser, is trained and qualified in providing an estimate of the worth of a property, such as a home or business. He or she has an extensive knowledge of the market and performs a thorough analysis in order to create an accurate appraisal of a property's value. A qualified professional will always present the information in a clear, written report.
The contents of an appraisal report include the estimated value of the property, the date, the purpose of the appraisal and the signature of person who performed the analysis. It must also identify the address of the property, and maps or photographs may also accompany the report.
An appraiser can estimate property value in one or more different ways. In a Direct Comparison, he or she researches what a buyer would get for a similar property, comparing real property listings and actual selling prices.
In a cost approach, the appraiser calculates what the cost of building a new structure like the appraised one would be under current market conditions. He or she takes land value estimation into account, and considers accumulated depreciation as well.
The Income method of appraisal considers the maximum amount of income a business or other property could produce. The appraiser calculates the operating income to help arrive at the value estimation. Emphasis is placed on what the income could be if the property was managed to its maximum potential.
Purposes for hiring an appraiser vary widely. An appraisal could be required for insurance reasons or as part of a divorce agreement as one element of the division of assets. An appraisal may also be needed when a donation to a charity is deemed tax deductible, for estate or gift tax, or for a liquidation.
The value determined in the appraisal often depends on the purpose of the analysis. For example, the appraiser may calculate fair market value in some situations and may apply liquidation value in others. In the US, each state has different requirements for the licensing of real estate appraisers, so people who are interested in this job should contact their individual state appraisal board or office for specific information.
@pleonasm - That's good practice, but the other thing people need to keep in mind is that at some point they need to take the appraiser(s) at their word.
If more than one licensed appraisers have told you you're charging too much for a property, then you need to reevaluate what you really want. I've seen quite a few people sit on the market for months, or even years, because they were simply charging too much. Maybe they put more into the property than it was worth, or maybe they have too much of an emotional attachment and can't think of it in terms of realistic money.
It's a good idea to do this when you're about to start renovations as well, particularly if the aim is to improve the market price. You don't want to spend thousands putting in a pool, only to realize it didn't raise the price by that much.
@KoiwiGal - To me, this is also a good idea because you can never completely trust a property appraiser. Now, that might sound cynical, but your house is usually one of the biggest assets you own. I don't care if your appraiser is your best friend from childhood, or even your own mother, you should always get a second opinion.
And if they can explain their reasoning, with examples from the neighborhood, and those examples all match up relatively well (of course, it's never going to be identical) then you can get a better picture of who to trust and what to do going forward.
It's a good idea, if you've had your property appraised, to compare it to other properties in the area. If you can, try to figure out why there's a difference, if there is one. It can help you to promote the more valuable aspects of your property, or to improve it where it needs improving if you're planning on selling it.
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