Appraisal 101



An appraisal is a professional opinion of value based on market data & analysis of the micro market. 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 role of the appraiser is to provide objective, impartial and unbiased opinions about the value of real property and to provide assistance to those who own, manage, sell, invest in and/or lend money on the security of real estate. Florida requires appraisers to be state certified in order to provide appraisals to federally regulated lenders. Appraisers have fulfilled rigorous educational and experience requirements and must adhere to strict standards and USPAP code of professional ethics. Qualified State Certified appraisers bring knowledge, experience, impartiality and trust to the transaction. In so doing, they help their clients make sound decisions with regard to real property.

Most appraisals are reported in writing, although in certain circumstances, an appraiser may provide an oral appraisal. A written appraisal report generally consists of: a description of the property and its locale; an analysis of the "highest and best use" of the property; an analysis of sales of comparable properties "as near the subject property as possible"; and information regarding current real estate activity and/or market area trends. The value indicated by recent sales of comparable properties, the current cost of reproducing or replacing a building, and the value that the property's net earning power will support are the most important considerations in the valuation of real property.

The following questions would be appropriate when selecting an appraiser:

  • Interior features & characteristics – While the number of bedrooms and baths are not something you’ll be changing to compete better with other homes, you do need to objectively compare them in order to end up with a value, to make an offer. Consider for improvements, features/characteristics:
    • Are you certified in the state you live?
    • How long have you been in practice?
    • What level of experience do you have in this particular type of property?
    • Are you familiar with property in this neighborhood?

The Appraisal Facts


Assumption: The appraised value of a property will vary, depending upon whether the appraisal is conducted for the buyer or the seller.

Fact: The appraiser has no vested interest in the outcome of the appraisal and should render services with independence, objectivity and impartiality. The market tells the appraiser value through paired analysis.

Assumption: Appraisers are hired only to estimate real estate property values in property sales involving mortgage-lending transactions.

Fact: Depending upon their qualifications and designations, appraisers can and do provide a variety of services, including advice for estate planning, dispute resolution, zoning and tax assessment review, PMI Removal, Divorce, and cost/benefit analysis.

Assumption:Market value should approximate replacement cost.

Fact:Market value is based on what a willing buyer likely would pay a willing seller for a particular property, with neither being under pressure to buy or sell. Replacement cost is the dollar amount required to reconstruct a property in-kind.

Assumption: Assessed value should equate to market value.

Fact: While most states support the concept that assessed value approximate estimated market value, this often is not the case. Examples include when interior remodeling has occurred and the assessor is unaware of the improvements, or when properties in the vicinity have not been reassessed for an extended period.

Assumption: Because consumers pay for appraisals when applying for loans to purchase or refinance real estate, they own their appraisal.

Fact: The appraisal is, legally owned by the lender - unless the lender "releases its interest" in the document. However, consumers may obtain a copy of the appraisal report from their lender who had ordered the report under the Equal Credit Opportunity Act.

Assumption: An Appraisal is the same as a home inspection.

Fact: An Appraisal does not serve the same purpose as an inspection. The Appraiser forms an opinion of value in the Appraisal process and resulting report. A home inspector determines the structural integrity of the dwelling & the condition of its major components and reports these findings.