Who Are Appraisers?
Home appraisers are professionals who provide an unbiased assessment of the value of a property. Their job is to determine the fair market value of a property by examining the property's features, assessing its condition, and analyzing comparable sales in the area. Lenders use appraisals to ensure that the property's value is in line with the loan amount being requested.
In order to become a licensed home appraiser, individuals must typically complete the following steps:
Meet education requirements: Individuals must complete a certain number of hours of appraisal education, which varies by state. In general, this education covers appraisal principles, methods, and ethics.
Gain experience: In most states, individuals must gain a certain amount of experience under the supervision of a licensed appraiser before they can become licensed themselves. The amount of required experience also varies by state.
Pass the exam: Individuals must pass a state-approved appraisal exam to become licensed. This exam typically covers topics such as appraisal methods, property valuation, and ethical standards.
Obtain a license: Once the education, experience, and exam requirements are met, individuals can apply for a license through their state appraisal board. The board will review the application, ensure that all requirements are met, and issue the license if approved.
Continuing education: Appraisers must complete continuing education requirements in order to maintain their license. These requirements vary by state, but generally require appraisers to complete a certain number of hours of continuing education every two years.
In addition to these requirements, appraisers must adhere to strict ethical standards and guidelines. This includes avoiding conflicts of interest, providing unbiased appraisals, and ensuring that their work is conducted in a professional and thorough manner.
How Do Appraisers Determine the Value of a Home?
Appraisers determine the value of a home by conducting a thorough inspection and analysis of the property. Here are the steps they typically take:
Inspection: Appraisers begin by physically inspecting the property to determine its condition, size, and any unique features that may impact its value. They will also take note of any needed repairs or upgrades.
Comparable sales: Appraisers will research recent sales of similar homes in the area, known as "comps." They will compare the subject property to these comps, looking at factors such as size, location, age, and condition.
Market analysis: Appraisers will conduct a market analysis of the area to determine the current market conditions and demand for homes in that location. They will also consider any current economic conditions that may impact the value of the property.
Cost approach: If the property is new or has been recently renovated, appraisers may use the cost approach. This involves estimating the cost of replacing the property and subtracting depreciation to arrive at the property's value.
Income approach: If the property is an income-producing property, such as a rental unit, appraisers may use the income approach. This involves analyzing the property's income and expenses to arrive at its value.
Final value determination: Based on their analysis, appraisers will arrive at a final value for the property. This value will be used by lenders to determine the amount of financing they are willing to provide for the property.
In summary, appraisers determine the value of a home by conducting a thorough inspection, researching comparable sales, analyzing the local market, using the cost or income approach when applicable, and arriving at a final value determination. This process ensures that the value assigned to the property is accurate and reflects its true market value.