Real Estate Appraisals, Essay Example

Real estate appraisers use different methods when appraising different types of properties. The method of appraisal differs depending on if the appraiser is looking at a residential, a multifamily, or a commercial property. Appraiser’s roles are indispensable to real estate as real estate agents and brokers have limited abilities when it comes what they can legally do within the appraisal business. Real estate appraisers themselves are trained and licensed.

The real estate appraisal process has eight steps. State the problem, list the data needed and the sources, gather, record, verify and analyze the necessary data, determine the highest and best use of the property, estimate the land value, estimate value using three approaches, reconcile estimated values for the final value estimate, and report the final value estimate. Depending on the type of property it is appraisers choose one of three value determination approaches, the sales comparison approach, the cost approach, or the income approach. For commercial properties the income approach is most often used. The cost approach is most often used for special purpose buildings and multifamily residences. For a single family residence, the cost approach is used. The most important factor in the high appraisal of a property is the determination of the highest and best use.

Real estate agents and brokers are limited as far as appraising goes. A real estate agent cannot legally perform an appraisal, but they can charge for and perform what are called broker price opinions, market analyses, or valuations. These can be useful since the agent or broker has often has firsthand knowledge of the market and goes inside the property, something appraisers do not normally do. When purchasing or refinancing a home, however, the bank will normally order a full appraisal of the property. This must be done by a trained and licensed real estate appraiser. Real estate appraisers take certification courses that meet the appraisal foundation’s requirements, outlined in the USPAP document. After successful completion of a certified course, an appraisal exam must be passed. Then all records of the course and passed exam are sent to the Office of Real Estate Appraisers to be verified and recorded.