FAQ

So what exactly is a home appraisal and why do I need one?

The role of a real estate appraiser is to provide an unbiased estimate of the market value of a home. Fannie Mae defines market value as :

The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 

  • buyer and seller are typically motivated

  • both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest 

  • a reasonable time is allowed for exposure in the open market

  • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto

  • the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale


Whether that value is used for a home purchase, refinance, divorce settlement, or estate purposes, the process is the same. The appraiser’s job is to collect the data from both the subject property as well as the surrounding market to perform an analysis of the pertinent details. This involves three main steps : the inspection, performing the necessary approaches to value, and reconciling all the collected information to determine a final value estimate.  

 

What is the difference between a home inspection and a residential appraisal?

A home inspection is an evaluation of the physical condition of a property, while a residential appraisal is an evaluation of the property's value. An appraisal takes into account factors such as the property's location, condition, and recent sales of similar properties, whereas a home inspection focuses on the property's structural and mechanical components.

 

What can I expect when an appraiser comes to my home?

A property inspection is a critical step in the appraisal process. During a property inspection, the appraiser visits the subject property to gather information and make observations about its condition, layout, and features. The inspection is essential to the development of an accurate and reliable appraisal report.

During the inspection, the appraiser will typically walk through the entire property, taking notes on its size, layout, and any notable features or amenities. They will also take photographs of the property's interior and exterior to document its condition.

The appraiser will make note of any visible defects, such as cracks in the walls or foundation, water damage, or other issues that could affect the property's value. They may also measure the dwelling and outbuildings, both inside and out, to determine the square footage of the home and other improvements.

In addition to the subject property, the appraiser may also inspect comparable properties in the area to gather data and ensure that the appraisal report reflects the local market conditions accurately.

After the inspection, the appraiser will typically return to their office to complete the appraisal report. The report will include a detailed analysis of the subject property, including its value, condition, and any notable features or amenities. It will also include an analysis of comparable properties in the area and other relevant market data.

 

How much does a residential appraisal cost?

The cost of a residential appraisal will vary depending on the scope of work involved. A quote can be provided upon request once initial information about the property and assignment are given.

 

Can I choose my own appraiser for a residential appraisal?

In cases where lending is involved, you typically cannot choose your own appraiser for a residential appraisal. Lenders typically select the appraiser from an approved and vetted list to ensure that the appraisal is impartial and unbiased. However, you can request a copy of the appraisal report and review it for accuracy.

 

What if the value of the appraisal is lower than expected?

If the appraisal comes in lower than expected, it may affect your ability to secure financing for the property. You may need to negotiate with the seller to lower the price or provide additional documentation to support the property's value. All lenders have a reconsideration process for appraisals that allows the borrower or their agent to provide additional information to the appraiser for review in an effort to challenge the appraised value. It is important to note that all reconsideration request must go through the lender as they are the appraisal client and appraisers are not permitted to modify a report without the lenders instruction.

 

What is USPAP?

USPAP stands for the Uniform Standards of Professional Appraisal Practice. It is a set of guidelines and rules that govern the appraisal profession in the United States. USPAP provides a set of ethical and professional standards that appraisers must adhere to when providing valuation services.

USPAP was created by the Appraisal Foundation, a non-profit organization that is recognized by the US Congress as the official source of appraisal standards and qualifications. The goal of USPAP is to promote ethical and professional conduct in the appraisal profession and to provide a consistent and reliable set of standards for appraisers to follow.

USPAP covers a wide range of topics related to appraising, including the ethical obligations of appraisers, the development and reporting of appraisal opinions, and the qualifications and competency of appraisers. It also covers specific topics related to different types of appraisals, such as real estate, personal property, and business valuations.

All appraisers who are members of professional organizations, such as the Appraisal Institute, are required to comply with USPAP. Compliance with USPAP is also required for appraisals that are used for federally related transactions, such as loans insured by the Federal Housing Administration (FHA).

In conclusion, USPAP plays a critical role in the appraisal profession by establishing a set of ethical and professional standards for appraisers to follow. Adherence to USPAP is essential to ensure that appraisals are accurate, reliable, and unbiased.