What is an Appraisal?

An appraisal is an opinion of value or the act or process of estimating value. This opinion, or estimate, is derived by using the three common approaches, all derived from the market. They are:

The Cost Approach to value is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less physical deterioration, functional obsolescence and economic obsolescence. The remainder is added to the land value to arrive at the total value.

The Sales Comparison Approach to value makes use of other benchmark or "comparable" properties of similar size, quality and location that have recently sold. A comparison is made to the subject property and adjustments are made to account for dissimilarities.

The Income Approach to value is of primary importance in ascertaining the value of income producing properties, and is generally given little weight in single-family residential properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net or gross income the property produces.

Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated.

What does an appraiser do?

The fundamental role of an appraiser is to provide a professional opinion, usually an estimate of market value, to be used in making real estate decisions. Appraisers develop appraisal reports that are the conveyance to another of an appraisal.

Why an Appraisal?

Anytime the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal helps you set the most appropriate value. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can the right financial decisions.

• Other reasons to obtain an appraisal include:
• To obtain a loan.
• To lower your tax burden.
• To establish the replacement cost of insurance.
• To contest high property taxes.
• To settle an estate.
• To protect your rights in a condemnation case.
• Because some government agency requires it.
• If you are involved in a lawsuit.

How are appraisers certified?

Licensure examinations for Real Estate Appraisers are given by the Department of Trade and Industry every year. Once an appraiser is licensed, he or she is required to take continuing professional education courses in order to keep the license current.

What is ''Market Value?''

Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. (Source: IVSC)

The Real Estate Appraisal Process

For property owners, a real estate appraisal is the linchpin to buying or selling their home. It allows the property transactions to occur among the buyer, seller, real estate agent and mortgage lender.

With a booming real estate market, an appraisal is becoming a more familiar concept. However, many individuals/companies selling their properties have little understanding of what qualifications an appraiser should possess to produce a reliable valuation of a property and how to prepare for an appraisal.

Before an appraiser arrives, there are a few things you should know. By law, an appraiser must be licensed by the Department of Trade and Industry to perform appraisals.

To facilitate the appraisal process, it's beneficial to have these documents ready for the appraiser:

• A plot plan or survey of the land;
• Floor plans of the building (if readily available);
• Original or Transfer Certificate of Title/Condominium Certificate of Title; and
• Latest Tax Declaration.

Once your appraiser has arrived, you do not need to accompany him or her along on the entire site inspection, but you should be available to answer questions about your property and be willing to point out any home improvements.