WHAT IS AN APPRAISAL?
An appraisal is a written opinion of the market value of a property, such as a home, factory, gem or artwork, as of a specific date. Prepared by a qualified appraiser, it represents an independent and impartial analysis of all the relevant data. Because market value is not apparent just by inspection, an appraisal is usually required when a property is sold, taxed, insured, financed, or inherited.
Almost anything that can be owned by a person or company can be appraised. Property can be categorized according to the main appraisal disciplines: Business Valuation, Gems & Jewelry, Machinery & Technical, Personal Property and Real Property.
Machinery & Technical includes such specialties as agricultural, computers & high tech, cost surveys, machinery & equipment, mines & quarries, public utilities, and railroads. Personal Property includes American folk art, antique furniture, audiovisual media recordings, books, ethnographic art, fine arts photography and oriental rugs, to name some. Real Property includes residential, rural and urban as well as others.
Appraisers are normally trained and accredited in several specialties (say antique firearms, armor & militia, and antique guns) within a discipline (Personal Property) and restrict their practices accordingly.
DO I NEED AN APPRAISAL?
You don’t if all you want is a rough ballpark estimate to satisfy your curiosity. You can get that from a neighbor, the newspapers, a book, a real estate broker, your banker or by searching the web. You do if you’re buying or selling, insuring or making a claim, financing, grieving property taxes, probating a will, settling a lawsuit or divorce, involved in bankruptcy, dissolution, or other litigation. In other words, if you need an estimate you can rely on.
HOW IS MARKET VALUE DETERMINED?
There are three common approaches, all derived from the market. The Cost Approach is what it would cost to replace or reproduce the property (home, farm, machinery, jewelry). The Comparison Approach compares the property to similar ones that have sold recently. The Income Approach looks at what a prudent investor would pay for the property based on the net income it produces. Not all approaches are used for a given property, not all are given equal weight, and other, more sophisticated approaches may also be used, as in appraising intellectual property.
HOW MUCH DOES AN APPRAISAL COST?
There is no fixed price. The price can be hourly, per diem or per project. An ethical appraiser never works “on commission” and never prices work according to the value of the property.
ARE APPRAISERS LICENSED?
Since the Savings & Loan debacle of the 1980s, many states, including New York and New Jersey, have licensed real estate appraisers. However, other appraisers are generally not licensed. This makes it very important for consumers to seek out appraisers certified by a recognized professional organization such as The American Society of Appraisers (ASA), which sets rigorous standards of experience, education, methodology and ethical conduct.
WHO DOES THE APPRAISER WORK FOR?
If you mean “Who can influence the outcome?” the answer is no one. Professional ethics (USPAP) demand the same outcome — an unbiased, independent and accurate appraisal — no matter who orders or pays for it. If you mean, “Who does the appraiser report to?” the answer is the party who ordered the report, regardless of who pays for it. Moreover, the appraiser will not discuss the appraisal with anyone other than the person who ordered it, unless otherwise instructed.
WHAT IS USPAP?
USPAP is the Uniform Standards of Professional Appraisal Practice, the code of ethics written by the Appraisal Foundation, which Congress authorized as the source of appraisal standards and appraiser qualifications. By relying on USPAP, an appraiser can produce appraisals — analyses, opinions, and advice — that are meaningful to you and not misleading in the marketplace. The current USPAP is available online. ASA accreditation requires knowledge of and adherence to USPAP.
WHERE CAN I GET INFORMATION ABOUT BECOMING AN APPRAISER?
A good place to start is our Join Us page or the booklet (PDF) How to Enter the Appraisal Profession” prepared by the Appraisal Foundation. Prefer a more personal introduction? Contact Us!