The
Appraisal Process
An
appraisal is a third-party estimate of the value of a piece of
property at a particular point in time. It can affirm your offer
price or block your transaction entirely. Understand how real
estate appraisals and appraisers work so you can solve any problems
that come up.
All appraisals must conform to guidelines set by the Federal Reserve,
but every appraisal is ultimately a subjective analysis of a property's
current market value. True market value can be difficult to ascertain
in markets where prices are volatile and properties vary widely.
To determine current market value, an appraiser will compare the
price of your home with that of at least three comparable homes
that are in the area and have sold within the past six months,
then adjust for differences in the properties. An appraiser will
physically measure and inspect the home (which doesn't qualify
as a home inspection) to compare, and may also take photographs
to include in the report with floor plans and a site map.
Potential
Problems
Inexperienced
appraisers with a lack of training can result in appraisal problems.
Appraisers are certified by the individual states under federal
guidelines, but only half the states require actual licenses.
Most states do, however, require appraisers to pass a written
examination and have 75 hours of continuing education and 2,000
hours of direct experience through an apprenticeship. Most appraisers
also have to abide by professional and ethical standards set by
industry organizations.