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An appraisal is an opinion or estimate of a property's value. It is an evaluation determined by someone qualified to estimate the value of real property.

And who determines who's qualified? The Federal Government has set minimum starndards by which each of the State's must license or certify each State's appraisers.  Beyond licensing and/or certification, different trade organizations such as The National Association of Independent Fee Appraisers,  The Appraisal Institute, (a merger between The American Institute of Real Estate Appraisers & The Society of Real Estate Appraisers), The National Society of Real Estate Appraisers, The American Society of Real Estate Appraisers and other organizations hold their members to rigorous standards. Certifications are based on continuing education requirements, ethical standards, and grievance and enforcement procedures.

Most lenders require a property appraisal for a new mortgage loan. This appraisal, which attempts to justify the contract price to the lender, usually takes place after the contract between buyer and seller has been finalized. The appraiser is usually given the contract price before he proceeds. Appraisals are also performed to determine a reasonable offering price in a sale, property value for estate tax purposes, value of land versus the structure, and for insurance and tax purposes.

An Appraisal Report describes the results of the procedure. Reports can be presented many ways, including oral, written, narrative, letter or form style. Most residential appraisals are presented on a standard Uniform Residential Appraisal Report. This form meets the requirements of most lenders as well as those in the secondary markets. Subjects covered include; Neighborhood, Site, Improvements, Interior Finish and Equipment, and a Valuation Section that includes the method(s) of appraisal used and a Market Data Analysis comparing similar properties in the neighborhood. A Photographic Addendum is usually attached, showing the property from various views, and Area & Tract Maps identifying the property's specific location.

An appraiser must try to determine the "fair market value" of the property. The estimation of this value is approached in 3 ways. The COST APPROACH determines the replacement cost of the land and the building at today's rates, less depreciation. The INCOME APPROACH measures the income potential of the property. The SALES APPROACH is the most valid approach in estimating property values. This method analyzes the selling prices of recently sold, comparable properties in the area. Sometimes a combination of methods is used to evaluate the property.

In the past, it was quite common for an appraisal to come in at the exact amount as the contract price of the sale. This benefited the lender, who decided which appraiser to use, and in turn the lender would reward the appraiser with more business.

An appraisal is an estimation. It does not determine the market rate, indicate a thorough inspection, guarantee the condition, or grant or imply any warranties regarding the condition of the property. Appraisals are not infallible and they can be very complex, depending on the nature of the subject property.

In 1985, the Mortgage Guaranty Insurance Corporation studied over 300 foreclosed properties around the country. These properties were selected for examination because the original appraisals and the ones conducted at the time of foreclosure were more than 20% apart. It was determined that in most cases, changes in the real estate market had affected the value differences, but in almost 40% of the cases, "the appraiser's inexperience or incompetence was usually responsible."

Order an appraisal when you need an accurate evaluation of a property. A realtor's opinion may not accurately reflect the true market price. Use a well-recommended appraiser, one who is a member in good standing in his trade organization. Use a specialist trained in residential evaluation when seeking a residential property, a specialist in commercial properties for commercial property purchases.

An appraisal can help you avoid over-paying for a property. If an appraisal comes in low, find out why. It may be that the appraiser missed something significant about the property. It may also be normal for the market price of a property to be 110% - 120% of the appraised value. This is true in many markets.

Depending on the complexity and scope, expect to pay between $250 - $1,000 for a good residential appraisal report. Experienced investors agree that it can be well worth the money.

Litigation / Lawsuits
Appraisals of properties involved in litigation.  Eminent domains, partial takings, easements, fire loss, flood loss, construction and undisclosed defects, etc.  Unlike many appraisal companies we will make court appearances (expert witness fees apply).  Qualified as a expert in Superior Court in multiple counties in Washington State.

Divorce / Dissolution
Appraisals for both contested and uncontested divorce actions. Current valuation as well as retrospective (value at time of marriage, etc.) valuations if needed.

Probate / Estate
Current and/or Retrospective (value at time of decedant's date of death).

Charitable Contribution
Current and/or Retrospective appraisals for determination of value for charitable contributions as required by the IRS per Form 8283.

PMI Removal
Guidelines for removing Private Mortgage Insurance from your mortgage payment - possibly saving you $50 to $150 per month.

Mortgage/Home Equity Loans
Conventional and/or FHA residential appraisals for banks, savings & loans, credit unions, and mortgage companies.

Construction Lending
Appraisals for banks and mortgage companies on proposed and new construction.

Employee Relocation
Major relocation companies and employers.

For banks, attorneys, accountants, government, individuals.

Most clients still require a "full" or "complete" appraisal on the industry standard Uniform Residential Appraisal Report (URAR). You can be assured that out reports are in full compliance with the Uniform Standards of Professional Appraisal Practice (USPAP). The following is a brief outline of what you can expect in your URAR report.

Invoice with tear-off return receipt

Cover Page with photo of subject property

Letter of Transmittal

Summary of Salient Features

Uniform Residential Appraisal Report Form 1004

Additional Comparables (if needed to bracket/support)

Comprehensive Valuation Conditions (HUD/FHA reports only)

Notice to the Homebuyer (HUD/FHA reports only)

Marshal & Swift's Cost Report - Detailed replacement cost report

Supplemental Addendum containing Explanation of Appraisal Process, Scope of the Appraisal, Research Resources, Competency of the Appraiser, Appraisal Company Information, Market Conditions in the Subject Neighborhood, Site Characteristics, Zoning Information, Highest & Best Use, Description of Improvements - Depreciation, Estimated Site Value, Cost Approach, Sales Comparison Analysis, Income Approach (when applicable), Final Reconciliation and Correlation.

Building sketch - Computerized with area calculations

Exterior Subject and Comparable Photos - digital standard

Interior Subject Photos - at least one page - digital standard

Subject plat map and comparable sales and listing map - digital color maps

Supporting maps (location, zoning, flood) as needed

Miscellaneous addenda may include an assessment history, MLS listing, etc.

Qualifications of the appraiser

Certification & Limiting Conditions, 6/93

Environmental Addendum


Multi-Purpose Supplemental Addendum

Copy of Appraiser's License

We provide a full range of complete and limited appraisal services and a variety of self-contained, summary and restricted appraisal report formats, both Form and Narrative.

We find that many of our clients do not require a full appraisal when they are familiar with the property and only need a supported market value estimate.
Please call or email us if you have any questions concerning the best type of report to meet your needs.

We make every effort to contact the client or property owner within 24-hours to schedule the inspection appointment. Our policy is to have a completed appraisal report within ten business days of the date of inspection.

Most delays are a result of not being able to inspect the property on a timely basis. When ordering an appraisal be sure to provide a "best" contact method to reach the person responsible for providing access to the property.

Your "hard copy" report will be mailed U.S. Mail unless express delivery is requested by the client. Express Mail, UPS, FedEx or Airborne charges will be added to the appraisal fee unless client supplies their shipper account number.

We also offer FREE electronic transmission of our reports in digital format for those clients capable of receiving EDI (Electronic Data Interchange) reports. We are capable of transmitting complete EDI reports, with photos and all addenda, in Alamode's Olympus software, but our preferred method is in Adobe Acrobat PDF format which can be viewed and printed on any DOS, Windows, Unix or Mac computer with free Acrobat Reader software.

Users of appraisal services are finding that not all state regulated appraisers are equal. Appraisers who are both state regulated and designated by the National Association of Independent Fee Appraisers exceed federally mandated state certification standards by meeting stringent experience and education requirements and abiding by a strictly enforced Code of Professional Ethics and rigorous Standards of Professional Appraisal Practice.

Click here for our appraiser comparison checklist. We have also provided links to major appraiser databases on our links page.
Looking for an easy way to receive complete appraisal or inspection reports online?  Visit our EDI (Electronic Data Interchange) page to receive your free Acrobat reader and learn about our other EDI options.  The PDF (Portable Document Format) file format is emerging as a popular medium for delivering online appraisal reports, since it does not require the person on the receiving end to have anything but Adobe's freeware Acrobat reader to view and print the appraisal file. 

Order your appraisal or building inspection on-line by filling out our improved request form and clicking "submit".  We confirm all orders the day they're received!

Our links are regularly updated with the most current and useful real estate related web sites. Be sure to check back often.

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George Nervik