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Alliance Appraisal Services LLC Real Estate Appraisal Company |
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Regarding Real Estate Appraisal
Because much private, corporate, and public wealth lies in real
estate, the determination of its value is essential to the economic
well-being of society. It is the job of the professional appraiser to
determine these values by gathering, analyzing, and applying
information pertinent to a property.
Unquestionably, the professional opinion of the appraiser, backed
by extensive training and knowledge, influences the decisions of
people who own, manage, sell, purchase, invest in, and lend money on
the security of real estate. And because the appraiser is trained to
be an impartial third party in the lending process, this professional
serves as a vital "check in the system," protecting real
estate buyers from overpaying for property as well as lenders from
over lending to buyers.
Many states require all real estate appraisers to be, at a minimum,
state licensed or state certified and have fulfilled rigorous
education and experience requirements and must adhere to strict
industry standards and a professional code of ethics as promulgated by
the Appraisal Foundation. To see the specific requirements for any
state click
here.
How long does an appraisal take?
The physical inspection of the real property being appraised can
take from approximately fifteen minutes to several hours, depending
upon the size and com
Appraisal VS. Engineer or Whole House
Inspection?
The appraiser is not a whole house inspector, engineer, architect,
electrician, plumber, H.V.A.C. technician or contractor. The appraiser
briefly walks through the house to get an idea of the general
condition and room count. An appraisal is not a guarantee of
condition. The appraiser will ask about any visible problems and those
which may not be visible, and will do his/her best to gauge any impact
on value attributable to those problems. You are encouraged to seek
the advice of experts if you have any questions about the structural
or mechanical aspects
Short form "2055" Vs. "URAR
Fannie Mae" Form Appraisal Report
A "Fannie Mae" - URAR form report has many items required
by the secondary mortgage lending market, that are not neces
In our complex society, you may need and use the services of a
professional real estate appraiser for a variety of reasons. Depending
upon an appraiser's designation and qualifications, he or she can
provide some or all of these services: Appraisals - Residential or
Commercial; Counseling and Consulting; Evaluations; Expert Witness
Testimony; Litigation Preparation; Feasibility Studies; Market
Analysis; Market Rent & Trend Studies; Tax Assessment Review and
Advice or Zoning Testimony.
Know Your rights in the appraisal process!
Under the Equal Credit Opportunity Act, your lender must provide
you with a copy of the appraisal report upon your written request. If
you are dissatisfied with any information contained in your appraisal
report, you should contact your lender immediately.
The following Items, if available, will help
your appraiser to provide a more accurate appraisal in a shorter
period of time.
A survey of the house and property; A deed or title report showing
the legal description; a recent tax bill; a list of personal property
to be sold with the house if applicable; a copy of the original plans
& specifications, The date and purchase price you paid when you
purchased the property; a list of recent improvements & cost as
well as any other information you feel may be pertinent.
The appraisal process is an orderly and concise method of reaching
an estimate of value. The process has six major steps which include:
definition of the problem, preliminary survey and appraisal plan, data
collection and analysis, application of the three approaches to value,
reconciliation of value indications, final estimate of defined value.
This process assists the appraiser in reaching a sound conclusion. The
major phase of this process involves the application of the three
approaches to value which include the Market Data Approach, the Cost
Approach and Income Approach. The three approaches are reconciled and
the value via most applicable approach, in the opinion of the
appraiser, is selected as the final estimate of value. In most
residential appraisals, particular
The market or direct sales comparison approach
to value
The market or direct sales comparison approach to an estimate of
value is a process of comparing market data, that is, prices paid for
similar properties, prices asked by owners, and offers made by
prospective purchasers or tenants willing to buy or lease. Typically a
comparison grid is used and adjustments are made to each of the
comparable sales used for major differences between the comparable and
the subject property for such items as location, gross living or
building area, lot size, condition/effective age, market conditions,
degree of remodeling, construction quality and significant amenities,
ie: fireplace, jacuzzi, in ground pool, garage, deck, patio, porch and
central air conditioning etc. In the market approach, the appraiser
attempts to both gauge and reflect the anticipated reaction by a
typical purchaser to the subject property.
A comparable sale is a property, that is similar to the subject
property in most respects, is located in a similar (nearby) location,
and has sold recently at arms length. The selection of comparable
sales is in most residential appraisals, the single most important
determining factor in establishing value. It is the appraisers
responsibility to adequately research the local real estate market and
determine which comparable sales best represent the value
characteristics of the subject property.
An arms length transaction is one in which both seller and
purchaser act completely independently of each other and have no
connection or relationship to each other.
Market value or fair market value is the most probable price that a
property should bring (will sell for) 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: (1) buyer and seller
are typically motivated; (2) both parties are well informed or well
advised; (3) a reasonable time is allowed for exposure to the open
market; (4) payment is made in terms of cash in U.S. dollars or in
terms of financial arrangements comparable thereto; and (5) 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.
The cost approach to value The cost
approach combines an estimate of land value with an estimate of
depreciated reproduction or replacement cost of the improvements. The
principle of substitution is the basis of the cost approach, in that
no rational person will pay more for a property than the amount for
which he can obtain, by purchase of a site and construction of a
building, with undue delay, a property of equal desirability and
utility.
The income approach is based on an estimate of net income from the
operation of an income producing property and the selection of the
property capitalization rate from market indications of similar
properties. The principle of anticipation is the basis of the income
approach and affirms that value is created by the expectation of
benefits to be derived from possession, operation and/or capital gain
at resale.
Typically, highest & best use means the use or utilization that
provides the most profitable return on investment. It is that use,
selected from reasonably probable and legal alternative uses, which
are found to be physically possible, appropriately supported and
financially feasible to result in the highest possible land value.
Uniform Standards of Profesional Appraisal
Practice
Appraisal Standards Board (ASB) Fax (479) 248-1358 |
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