Glossary
IMPORTANT TERMINOLOGY
An opinion of value.
The Appraisal Foundation is a Congressionally authorized non-profit organization established in 1987. The Appraisal Foundation is dedicated to the advancement of the appraisal profession. The Foundation accomplishes its mission through the work of its three independent boards: the Appraisal Practices Board (APB), the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB).
Appraisal Management Companies have contracts with companies (such as lenders) that require appraisal services. Appraisal Management Companies act as agents to hire the appraiser and provide other valuation services.
The APB is charged with the responsibility of identifying and issuing opinions on recognized valuation methods and techniques, which may apply to all disciplines within the appraisal profession. Compliance with guidance issued by the APB is voluntary.
The act or process of developing and communicating an opinion about the quality of another appraiser’s work.
The ASB sets forth the rules for ethics and competency in developing an appraisal and reporting its results within the Uniform Standards of Professional Appraisal Practice (USPAP).
The AQB establishes the minimum qualification criteria for state licensing, certification and recertification of real property appraisers.
A shortened term for similar property sales, used for comparison in the valuation process; also called “comps.”
A set of procedures through which a value is derived for a property by estimating the current cost to construct a reproduction of (or replacement for) the existing structure. This estimate includes deducting depreciation from the total cost, and adding the estimated land value.
A credible appraisal is one that is worthy of belief. A credible appraisal provides support, by relevant evidence and logic, for the opinion of value.
A set of procedures through which an appraiser derives a value for an income-producing property by converting its anticipated cash flows into property value.
Appraisers are licensed and certified by the state appraiser regulatory agencies, after meeting minimum education, experience and examination requirements. All states must adhere to, at a minimum, the criteria established by the Appraiser Qualifications Board of The Appraisal Foundation.
Typically the Multiple Listing Service is operated by the local/regional REALTORS® Associations and contains property listings, sales and expired listings. Most Licensed and Certified Appraisers have access to this information.
Public record data include local, state and federal records and documents concerning the subject property and comparables. For most residential properties, public records are maintained by the county or local municipality and include the registry of deeds, tax assessment information, and plat and survey records. Other records may include soil surveys, topography maps, zoning maps, etc.
A set of procedures in which a value is derived by comparing the property being appraised to similar properties that have been sold recently, then making adjustments to the sale prices of the comparables based on their differences to the property being appraised.
Should I have an appraisal done before purchasing or selling a home?
An appraisal will provide you with an objective opinion and help you to determine the Fair Market Value on the home you are considering to purchase or sell. The fee for a high quality appraisal report will be a small investment in the confidence that you will receive about your purchase agreement.
Lenders will require an appraisal to determine the value of the property that is being sold. You can relieve some of the stress of selling or buying a home by having an appraisal done before the sale. As a seller, an appraisal will assist in marketing of your home to prospective buyers.
Who performs the appraisal?
Our Staff of experienced State Certified, Licensed and Insured appraisers. Each with there own experience and expertise within a particular County or Town.
What geographic area do we cover?
Nassau, Suffolk, the Five Boroughs, Northern New Jersey, Westchester, Rockland County & Florida.
When can I expect the results of the appraisal?
The inspection process is a valuable asset in determining the appraised value of your property. However, it is only a small percentage of the appraisal process. Typically within five days of Inspection of the Subject Property.
How long is an appraisal good for?
Three to Six months depending on its purpose and end user.
What is the purpose and function of the appraisal?
The sole purpose of the appraisal is to form an opinion of the market value of the property. For mortgage loan purposes the function of the appraisal is to assist your lender in evaluating the subject property as collateral for your mortgage loan. An appraisal can also be used for state purposes, tax reasons or simply to know the value of your home.
What is the definition of market value?
Market value is the most probable price a property brings in a competitive and open market under all conditions requisite to a fair sale. A fair sale occurs when the price is not affected by undue stimulus and when both the buyer and seller act prudently and knowledgeably.
How does the appraiser arrive at his/her opinion of market value?
The appraisal is based on information gathered by the appraiser from public records, inter-office data, inspection of the subject property and neighborhood, and selection of comparables within the subject’s market area. The appraiser is required to select a minimum of three recent closed sales similar to the subject in regards to style, location, square footage and physical amenities. The appraiser then makes a dollar adjustment either negatively or positively when appropriate to reflect the market reaction to those items of significant variation. Remember, the dollar cost of an individual amenity of additional feature does not always reflect the contributing value of that item.
What is involved in the appraisal process?
First, we will do a careful physical inspection of your home. Don’t worry about the kids, toys, unmade beds, vacuuming or other household disorder. We are looking at the structure, condition and features of your home. This is only the beginning of the appraisal process. The inspection usually lasts about 10-45 minutes depending on the complexity of your home.
Second, you may see your appraiser driving up and down streets of your neighborhood. He/She will be evaluating the neighborhood for homes that are similar to yours in location, size, design, number of rooms and extra features. We call these homes “Comps” or “Comparable Sales.” Our appraiser makes dollar adjustments to reflect differences in “Comp” properties. Upgrades like fireplaces, air conditioners or home improvements add value to a property (usually not dollar for dollar, but will add value).
Finally, we are ready to prepare our report and submit it to your lender. At that time, your lender will be contacting you with the results. Keep in mind that the typical report requires extensive research and additional 6-8 combined hours by the appraiser and staff to complete the appraisal.
Our appraisers are friendly, courteous and interested in providing any information you may need. For mortgage loan purposes ethically, we have a client relationship with your lender, therefore communication must go through your lender. However, feel free to ask questions while we are in your home. If this is a personal appraisal, our relationship is with you.