What Does A Real Estate Appraiser Do?
A real estate appraiser is a type of appraiser whose job it is to figure out how much a piece of real estate is worth at a specific moment in time. Real estate appraisers are hired to inspect and compare a property to similar properties that are currently for sale or have recently sold. Then they organize the information and decide on a fair value for the property.
There are two main types of real estate appraisers:
Commercial appraisers are hired to inspect and value:
- Commercial property
- Office buildings
- Apartments and condominiums with five or more units
- Vacant land zoned for commercial use
Residential appraisers are hired to inspect and value:
- Residential property
- Single family homes
- Single family vacation properties
- Apartments and condominiums with four or less units
- Vacant land zoned for residential use
Appraisers not only specialize in a certain type of property, but in a certain area as well. They make sure to stay informed about any real estate trends in the area, as well as plans for future development. This allows them to learn about the area, so that they can do a better job deciding property values.
Real estate appraisers can work for a variety of employers, including:
- Self-employed as an independent fee appraiser
- Private appraisal companies
- Real estate companies
- Mortgage companies
Real estate appraisers can be hired to inspect and value a property for a variety of reasons, almost always because something is about to change, including:
- Development status
Unlike assessors, who figure out the value of many properties at once, real estate appraisers look at each property one at a time.
In order to figure out a fair and current value of a property a real estate appraiser must carefully inspect it. This inspection starts with making sure the property’s legal description is accurate by checking it in public records. If they find something that is incorrect, they must figure out where the mistake occurred and work to fix it.
Appraisers must travel to the property and complete a physical inspection. While they are there they collect information about the property, including:
- Number of rooms
- Number of bathrooms
- Amenities – business or community use
- Square footage
- Land size
- Overall Interior and exterior
- Updates or remodeling
- Anything special, for example:
- Flood plain
- Swimming pool
- Irrigation rights
- Area crime rates
- Closeness to something undesirable
Even though an appraiser inspects a property, it is not as detailed as that of a property inspector. Appraisers are looking at the overall value of a property, as opposed to the smaller details that an inspector looks at.
While they are at the property they write down their observations and take detailed photographs of the inside, outside and surrounding property. These photographs show the condition of the property at the time of the appraisal.
After finishing the physical inspection of a property, real estate appraisers complete research about similar properties called comparables. They look at properties in the same area that have recently sold or are currently for sale.
Then they adjust the value of the property they are appraising, depending on how it matches the different traits of the comparable properties. This helps them decide what a property is currently worth.
Appraisers must think about whether the property has the ability to make money by being leased. They look at any lease agreements from the past to see how much money the property can make each month.
Real estate appraisers also look at a property’s past appraisals to see what value it has been given before. Then they can adjust the previous value based on any changes to the property, surrounding properties, or the current real estate market in the area.
Once the appraiser finishes all of this research and decides on a value for the property, they must organize the information into a formal report. Appraisers include all of the information about their inspection, research, comparables, and observations into the report so that the person reading it can understand how they decided on a value for the property.
In the event that a property owner disagrees with the appraiser’s opinion about a property’s value, the appraiser must be prepared to explain and defend the process they used to decide the appraised value.
Appraisals can be simple or complex depending on the property that is being appraised. A single-family home on a small lot in an established neighborhood will be easier to appraise than a very large horse property with a private home, irrigation rights, multiple outbuildings, and the commercial use of boarding horses.
A successful real estate appraiser needs to have excellent organizational skills. They must be very observant, and able to collect and study information in a systematic way. Appraisers need to be able to communicate their decisions in written reports, as well as verbally when necessary.