• What is an appraisal?
• What is an appraiser?
• Appraisal Management Companies
• What do appraisers really do?
• What are appraisers' professional standards?

An appraisal is defined as an opinion of value by professional appraisal standards (Uniform Standards of Professional Appraisal Practice, see below). Appraisers consider appraising to be both an art and a science. You probably have an opinion of the value of your home. Your opinion and a professional appraiser's opinion may be the same. But appraisers are required to be objective and impartial in their analyses and opinions. A professional appraiser has been trained in appraisal methodology and looks at how your home compares with sales and listings of homes similar to yours, considers many factors such as price trends and proximity to a freeway, complies with professional standards, and usually completes a written report.

An appraiser is a real estate professional who specializes in providing opinions of value (appraisals). Most appraisers are real estate appraisers, who specialize in real property. Other appraisers specialize in other types of property, such as gems or machinery and equipment. Professional appraisers have taken courses and been supervised during their training period. State licensed and certified appraisers must pass a test and have completed basic education and continuing education. Most states also require a period of supervision, usually 2,000 hours before being able to do appraisals "on your own."

Appraisals are usually done through a trusted and certified appraisal management company. These companies are third parties in the home buying or refinance process, which means the appraiser does not work for the buyer or the seller/owner. Having an appraisal management company as a third party guarantees that they are not biased and will not bend money or values in either party’s favor. In fact, it’s illegal for appraisers to work directly for or with the mortgage company as they could round numbers up or down to better fit the bank’s desires. The point of an appraisal management company is to give a legitimate and honest estimate of the home value.

So why would you want to go with an appraisal management company versus just an independent appraiser? The answer is simple. An appraisal management company (AMC) is a business entity that administers a network of certified and licensed appraisers to fulfill real estate appraisal assignments on behalf of mortgage lending institutions, as well as other entities. The AMC recruits, qualifies, verifies licensing, and negotiates fees and service level expectations with a network of third-party appraisers. This fact alone allows you to rest at ease in knowing that the AMC you are working with will staff only certified and qualified appraisers. Appraisal management companies also provide administrative duties like order entry and assignment, tracking and status updates, pre-delivery quality control, and preliminary and hard copy report delivery. By the appraisal management company presiding over these administrative duties, you are guaranteed that someone is always working on your appraisal and the conclusion of the process. You do not have to worry about your file being delayed because a single appraiser got too busy and you have become their last priority.

Appraisal management companies work like fine oiled machines and consistently manage ongoing quality control, accounts payable and receivable, market value dispute resolution, warranty administration, and record retention. An appraisal management company, therefore, is an outsourcing solution that is usually paid by a lender-client to act on the lender/client’s behalf to engage real estate appraisers and to perform the administrative functions involved in the appraisal ordering, tracking, and conclusion.

The physical inspection of a home for an appraisal, is just part of the appraiser’s job. Before they go a house, they research public records information, get a plat map, check the zoning and flood data, and printout sales and listings of similar homes. During the inspection, they make a drawing of the home and other improvements such as a swimming pool and make notes on physical characteristics such as floor coverings and built in appliances. They check the site boundaries against my plat map, and look at the adjacent properties. After completing the inspection, they select comparable sales and listings and take photos of them. Back at the office, they may contact real estate agents for more information on the sales terms, condition of the home, etc., reconcile conflicting information from different data sources, and write up the report. Total time? About 6 to 8 hours, on average. I work in the San Francisco Bay Area, where data is computerized and plentiful. Appraisers working in rural areas or with less data availability will take longer to complete an appraisal.

Appraisals of income producing property are much more time consuming as more research and analysis is required. The time can vary from a few days on a small apartment building to many weeks for a large, complex property.

For many years, the appraisal process has been seen by many as mysterious. This is partly the fault of appraisers, as we have not informed the public of what we really do.

All state licensed and certified appraisers must adhere to the Uniform Standards of Professional Appraisal Practice (USPAP). A copy of the current USPAP can be found on the Appraisal Foundation Web site at www.appraisalfoundation.org. Go to the Appraisal Standards Board section, then click on USPAP. The Appraisal Foundation is a national nonprofit organization that determines USPAP and educational requirements for state licensed and certified appraisers. Members of appraisal professional organizations, whether or not they are licensed or certified, are required to adhere to USPAP.