Photo is from my grandparents' farm in Illinois
Roger F. Tibble, Esq. recently published an excellent article in the ABA GP Solo & Small Firm Division’s Law Trends regarding the value of real estate appraisals. I found this article of particular interest to me because I practice matrimonial law where the Husband and Wife’s appraisals may significantly vary from one another. I don’t envy the job of an appraiser. He/she uses objective information to try to give a numerical value on a property — but in reality a property is worth what one particular buyer is willing to pay.
So how do you make sense of it all? How to you really evaluate the accuracy of the appraisal?
Look At The Qualifications of the Appraiser
When looking for a real estate appraiser, please make sure that he/she is properly licensed for the type of property that you are getting appraised (e.g., residential, industrial, commercial farm). If this person has obtained a temporary appraisal license you should access whether this person has experience appraising properties in your state and/or the type of property that is being appraised.
Look Critically At the Appraisal Itself
Tibble accurately listed a few questions to ask yourself when evaluating the appraisal report:
1) Has the appraiser appropriately analyzed the property’s general and immediate market by identifying and analyzing those market factors and trends that impact market demand for the property and its market?
2) Has the appraiser correctly quantified the subject property, both its land parcel and improvements?
3) Has the appraiser properly analyzed the property’s highest and best use, as vacant and as improved?
4) Has the appraiser selected the appropriate approaches to a value indication, cost approach, sales comparison approach, and income approach; and correctly used them?
5) Are the appraiser’s comparables cited in the sales comparison approach truly comparable and were they properly analyzed and adjusted for differences when compared to the appraised property?
6) In reconciling the value indications from the approaches to value that were used, did the appraiser communicate why one approach was relief on more than another or why one comparable was a better indication of value for the appraised property than another?
7) Does the appraisal and appraisal report meet the Uniform Standards of Professional Appraisal Practice as published by the Appraisal Standards Board of the Appraisal Foundation (USPAP”) and thus include a separate, signed certification to that effect?
For more information regarding the value, accuracy and dependability of appraisers, I suggest reading Tribble’s full article here.
Photo from Leland Rincker Simmentals in Shelbyville, Illinois