Real Estate Appraisal
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A real estate appraisal is a service performed by a
licensed or certified appraiser, who develops an opinion of value based upon the
highest and best use of real property. The highest and best use is that use
which produces the highest value for the land, as if vacant. This use is based
on 4 parts; physically possible, appropriate, legal, and economically feasible.
Also of importance is the definition of the type of value being developed and
this must be included in the appraisal, i.e. market value, condemnation value,
quick sale value, etc. For mortgage valuations of improved residential property,
this value is most often reported on a standardized form, the Uniform
Residential Appraisal Report.[citation needed]
An appraisal is performed for a specific client, to whom the appraiser has
a fiduciary responsibility, regardless of what party ultimately pays for the
appraisal, whether anyone actually pays for the appraisal, or when the appraisal
is paid for. Typically residential appraisers agree to accept orders from
lending institutions with the understanding that payment will be made following
settlement, or closing of the loan. In most cases, the homeowner or buyer
ultimately pays for a residential appraisal, either directly or rolled into
settlement fees.
In the USA, minimum appraisal standards and appraiser qualifications are
the province of The Appraisal Foundation which is chartered by
Congress.[citation needed] Through one of its boards, The Appraisal Standards
Board (ASB), it periodically publishes the Uniform Standard of Professional
Appraisal Practice (USPAP). USPAP provides the minimum development and reporting
standards an appraiser/appraisal report must meet. The Appraisal Foundation is
also responsible for setting the minimum qualifications for appraiser
licensure/certification through its other board, The Appraisal Qualifications
Board (AQB). The AQB is responsible for establishing the minimum education,
examination, and experience requirements for licensed/certified appraisers.
Effective January 1, 2008, the requirements to become a state licensed or
certified real property appraiser will significantly increase.[1] State
licensing was established in the early 1990s in the wake of the Savings and Loan
"crisis".
The implementation of licensure and enforcement are state functions. In
addition, there are appraisal organizations, private not-for-profits, some of
which date back to the Great Depression of the 1930s, such as the American
Society of Farm Managers and Rural Appraisers, founded in 1929.[citation needed]
Others were founded as needed and opportunity arose in specialized fields, such
as the Appraisal Institute and the American Society of Appraisers (founded in
the 1930s) and the International Right of Way Association and the National
Association of Realtors (after World War II). These organizations all existed to
establish and enforce standards, but their influence has waned as the government
increases appraisal regulation.
There are several professional organizations of appraisers in the US. They
include the American Society of Appraisers (ASA), the American Society of Farm
Managers and Rural Appraisers, and the largest, the Appraisal Institute (AI). In
addition to state licensing and certification, appraisers can earn professional
designations from the above organizations. The most highly regarded is the MAI
(Member, Appraisal Institute) which requires approximately one year of post
graduate college level course work, a three year internship, and successful
completion of a two day Comprehensive Examination.
In the UK, real estate appraisal is known as property valuation and a real
estate appraiser is a land valuer or property valuer (usually a chartered
surveyor who specialises in property valuation). Property valuation in the UK is
regulated by the Royal Institution of Chartered Surveyors (RICS), a professional
body encompassing all of the building and property-related professions. The RICS
professional guidelines for valuers are published in the RICS Appraisal and
Valuation Standards, commonly known as the Red Book.
The reader should be aware that differences in nomenclature exist between
the different countries. Although the overall concepts are very similar, the
reader should be careful to ascertain that the proper nomenclature is being used
for their particular area. Stop Quote http://en.wikipedia.org/wiki/Real_estate_appraisal
Real Estate Appraisal
