What is an Appraisal?
An appraisal is a professional appraiser’s opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience, and professional judgment of the appraiser. The reasons for performing a real property appraisal are just as varied.
What Qualifications Must Appraisers Have?
All states require appraisers to be state licensed or certified in order to provide appraisals to federally regulated lenders. To become licensed or certified, one must pass an examination that is administered by your state’s appraisal board. Because state requirements vary, contact your state’s regulatory agency for specific requirements. The Appraiser Qualifications Board (AQB) of The Appraisal Foundation is authorized by Congress to establish the minimum requirements for Certified General Real Property Appraiser and Certified Residential Real Property Appraiser classifications, and the AQB provides recommended minimum requirements for the Licensed Real Property Appraiser and Trainee classifications.
What is the Role of the Appraiser?
The role of the appraiser is to provide objective impartial, and unbiased opinions about the value of real property-providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate. Appraisers assemble a series of facts, statistics, and other information regarding the specific properties, analyze the data, and develop opinions of value. Each appraisal assignment challenges the appraiser’s ability to put analytical skills into practice, exercise sounds judgment, and communicate effectively.
What are the approaches to value?
There are three general groups of methodologies for determining value. These are usually referred to as the three approaches to value which are independent of each other:
- Cost Approach
This approach is based upon the principle that the value of the property is significantly related to its physical characteristics, and that no one would pay more for a facility than it would cost to build a like facility in today’s market on a comparable site.
- Income Approach
The Income Approach is based on the premise that properties similar to the subject are income producing, and that investors purchase these properties based upon their income-producing ability. In Direct Capitalization, market rents for the subject property are estimated, applicable operating expenses are deducted, and the resulting net operating income is capitalized into a value estimate.
Another method of the Income Approach is the Discounted Cash Flow Analysis. This approach follows the same methodology as direct capitalization; however, projects the cash flows over a typical investor holding period. This approach is meaningful for properties which irregular cash flows, multiple tenants or non-stabilized properties.
- Sales Comparison Approach
This approach is based on the principle of substitution. This principle states that no one would pay more for the subject property than the value of similar property in the market. This approach analyzes sales of comparable properties with regard to the use, location and condition of each sale. Comparisons are made for varying transactional and physical characteristics.
What is an MAI?
An MAI is a designated member of the Appraisal Institute, the highest level of accreditation in the industry.
What is an AI-GRS?
An AI-GRS is a designation for General Review Specialist by the Appraisal Institute, the highest level of accreditation in the industry.
What is a typical turn-around time for a commercial appraisal?
Commercial appraisals are complicated and take many hours to complete. Typically, commercial appraisals take two to three weeks to complete. We do provide expedited turn times at an additional cost.