Real Estate Appraisals
A Real Estate Appraisal is a service performed by a licensed or certified appraiser who develops an opinion of value based upon the highest and best use of real property. The highest and best use in real estate appraisal is the use that will render the maximum fair market value of a particular property. This use is based on 4 parts namely the physically possible, appropriate, legal, and economically feasible.
An appraisal is performed for a specific client, to whom the appraiser has a fiduciary responsibility, regardless of what party ultimately pays for the appraisal, whether anyone actually pays for the appraisal or when the appraisal is paid for. Typically residential appraisers agree to accept orders from lending institutions with the understanding that payment will be made following settlement or closing of the loan. In most cases, the homeowner or buyer ultimately pays for a residential appraisal, either directly or rolled into settlement fees.
In the United States, the minimum appraisal standards and appraiser qualifications are the province of The Appraisal Foundation which is chartered by the congress. The Uniform Standard of Professional Appraisal Practice (USPAP) periodically published by the Appraisal Standards Board (ASB). USPAP provides the minimum development and reporting standards an appraiser/appraisal report must meet. The Appraisal Foundation is also responsible for setting the minimum qualifications for appraiser licensure/certification through its other board, The Appraisal Qualifications Board (AQB). The AQB is responsible for establishing the minimum education, examination, and experience requirements for licensed/certified appraisers.
It is very important also to know the definition of the type of value being developed and must be included in the appraisal. Some of the values sought by the appraisal are listed:
Market Value – the estimated amount for which a property should exchange on the date of valuation between a willing buyer and seller in arms-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion.
Value-in-use – The net present value (NPV) of a cash flow that an asset generates for a specific owner under a specific use. It is the value to one particular user, which may be above or below the market value of a property.
Investment value - is the value to one particular investor, which may be above or below the market value of a property.
Insurable value - is the value of real property covered by an insurance policy. Generally it does not include the site value.
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An appraisal is performed for a specific client, to whom the appraiser has a fiduciary responsibility, regardless of what party ultimately pays for the appraisal, whether anyone actually pays for the appraisal or when the appraisal is paid for. Typically residential appraisers agree to accept orders from lending institutions with the understanding that payment will be made following settlement or closing of the loan. In most cases, the homeowner or buyer ultimately pays for a residential appraisal, either directly or rolled into settlement fees.
In the United States, the minimum appraisal standards and appraiser qualifications are the province of The Appraisal Foundation which is chartered by the congress. The Uniform Standard of Professional Appraisal Practice (USPAP) periodically published by the Appraisal Standards Board (ASB). USPAP provides the minimum development and reporting standards an appraiser/appraisal report must meet. The Appraisal Foundation is also responsible for setting the minimum qualifications for appraiser licensure/certification through its other board, The Appraisal Qualifications Board (AQB). The AQB is responsible for establishing the minimum education, examination, and experience requirements for licensed/certified appraisers.
It is very important also to know the definition of the type of value being developed and must be included in the appraisal. Some of the values sought by the appraisal are listed:
Market Value – the estimated amount for which a property should exchange on the date of valuation between a willing buyer and seller in arms-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion.
Value-in-use – The net present value (NPV) of a cash flow that an asset generates for a specific owner under a specific use. It is the value to one particular user, which may be above or below the market value of a property.
Investment value - is the value to one particular investor, which may be above or below the market value of a property.
Insurable value - is the value of real property covered by an insurance policy. Generally it does not include the site value.
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Labels: Appraisal, real estate, Real Estate Appraisals
posted by realestatevegas | 5:06 AM
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