WHAT IS REAL ESTATE APPRAISAL?
What is a real estate appraiser and what do they do? If you pursue employment in the real estate industry or buy/sell a home, you will become familiar with this practice. Real estate appraisal is the process through which real estate brokers and homeowners ascertain the value of a property they wish to sell. By ordering a property appraisal, the seller gets an idea of what the property is worth.
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Quality real estate appraisal is an important part of buying or selling a house. Each property features unique characteristics that factor into its overall market value. Homeowners may make changes to a property that raise or lower its value. Appraisals make possible the fair and reasonable conditions that allow for mortgage loans, property taxation, and settling estate and divorce disputes. Read on to learn more about the job description for real estate appraisers.
WHAT IS A REAL ESTATE APPRAISER?
Real estate appraisers assess the market value of properties, such as homes or commercial real estate. Their work forms the basis of valuing, selling, and buying property fairly and lawfully. If you want to make a purchase loan on property, you legally need to access the services of a real estate appraiser to determine its market value. This way, the lender knows that your requested amount is close to an accurate appraisal of how much you need. What does a real estate appraiser do to fulfill these ends? The following sections provide detailed information about an appraiser’s daily duties and skills.
WHAT DOES A REAL ESTATE APPRAISER DO?
Real estate appraisers focus on strategies for monetarily valuing property for their clients. This includes carefully judging property damages and determining how to fairly compensate clients. These professionals typically work full time, often alternating between onsite and office work. Self-employed appraisers typically work longer hours, as they may need to complete reports on weekends.
A real estate appraiser’s typical day may start by traveling to properties to record their characteristics. After visiting and observing a property, appraisers analyze the property’s value relative to comparable real estate. They examine information from the housing market and property databases to assign a monetary value to the property and then communicate this information to the seller through written reports. These reports inform the values that are set for purchase loans, taxation, and other agreements and payments.
THE POSITION REQUIRES STRONG CRITICAL THINKING SKILLS — APPRAISERS USE THEIR OWN OBSERVATIONS AND MULTIPLE DATA SOURCES TO FAIRLY ASSESS A PROPERTY’S VALUE.
A variety of skills can contribute to a real estate appraiser’s professional success. The position requires strong critical thinking skills — appraisers use their own observations and multiple data sources to fairly assess a property’s value. Additionally, problems may arise in the appraisal process, which requires real estate appraisers to quickly develop alternative solutions.
These professionals need strong math skills to appropriately calculate a property’s storage space and square footage. These appraisers also need strong writing skills to create well-organized, informative reports documenting the value of properties and homes. Excellent verbal communication and customer service skills ensure that these appraisers can get a clear sense of what their clients need and then clearly communicate appraisal results. Remaining polite and friendly in their interactions with customers can improve their chances of getting future business.
INDIVIDUALS WHO GAIN THE SKILLS AND KNOWLEDGE NEEDED TO WORK AS AN APPRAISER MAY ALSO FIND WORK AS AN AUDITOR, COST ESTIMATOR, OR TAX EXAMINER.
Many industries employ real estate appraisers. Some professionals work for real estate agencies, while others may work for government entities or large corporations. According to the Bureau of Labor Statistics, most real estate appraisers work for local governments. Many operate as self-employed independent contractors. Some use the job title “real estate assessor” rather than “appraiser.” Individuals who gain the skills and knowledge needed to work as an appraiser may also find work as an auditor, cost estimator, or tax examiner.
To complete their work properly, real estate appraisers rely on a variety of tools. When working onsite, they usually need measuring tools to check property dimensions. Typically, these appraisers bring a camera to the property to document characteristics. They also often bring a notebook to record different impressions or homeowner-provided information. They may access records in local government or internet databases to compare similarly valued properties.
IN THE U.S., REAL ESTATE APPRAISERS TYPICALLY SPECIALIZE IN EITHER COMMERCIAL REAL ESTATE OR RESIDENTIAL PROPERTY APPRAISAL.
Many different software tools can also help real estate appraisers in their work. They may use analytical and business intelligence software applications such as Palisade StatTools to help make sense of large data groupings. They may also use financial analysis software, such as Delphi Technology, to better understand housing market trends. Many employers require a familiarity with these (or similar) software applications or train employees in using them.
In the U.S., real estate appraisers typically specialize in either commercial real estate or residential property appraisal. Commercial real estate appraisers work chiefly with industrial and office buildings, land, hotels, and shopping centers, while residential appraisers appraise the value of people’s homes. While many people associate real estate appraisal with the residential specialty, business owners may need to request appraisals for tax-related purposes or to take out new loans for business ventures.
WHAT ARE THE RESPONSIBILITIES OF A REAL ESTATE APPRAISER?
Gather Information on New and Existing Properties
Real estate appraisers may start by researching legal descriptions and sales, lease, or assessment records related to a property. They then visit the property to gather more data. This involves physically inspecting the interior and exterior, measuring structures to verify square footage and storage capacity, and taking photographs.
Consider External Factors to Determine Property Value
To help determine a property’s value, real estate appraisers search public records for information on sales of comparable properties. They also examine market trends and evaluate the surrounding area. This may include obtaining county land values or determining the type and location of nearby services, such as schools or shopping centers.
Maintain Property Records
As part of their daily duties, real estate appraisers — especially those who work for local or state government agencies — record changes to properties over time. This involves conducting field inspections to assess property additions that may have increased a property’s value or damages that may have lowered it.
Testify in Court
Real estate appraisers sometimes testify in court as expert witnesses to help settle disputes over estate or divorce proceedings. Sometimes they participate in larger cases involving real estate fraud or other issues. Oftentimes, they must describe their appraisal methodology to the court to ensure transparency.
Prepare Written Reports of Their Findings
Real estate appraisers must prepare written reports presenting their findings. They give the property’s value along with an explanation describing how they arrived at the figure. They present evidence in the form of photographs; notes; and data on previous sales, leases, and appraisals of the property and similar properties in a well-organized report that meets appraisal standards.
Real estate appraisers use the large amounts of data they collect during valuation to help the real estate industry construct financial models. These models help determine the future values of properties. Professionals use special financial modeling software applications and stay current on real estate market trends.
WHAT QUALIFICATIONS DO YOU NEED TO BECOME A REAL ESTATE APPRAISER?
- Appraisers who work in residential real estate usually hold at least an associate degree in real estate.
- Appraisers who work in commercial real estate usually need at least a bachelor’s degree.
- Most employers prefer at least a bachelor’s from prospective employees, regardless of specialization.
- The typical real estate program that prepares graduates for work in appraisals includes coursework in finance, real estate law, and statistics.
- Real estate appraisers need basic math skills to fulfill everyday job duties, such as measuring structures during inspections and calculating a property’s value.
- Familiarity with more advanced math concepts can assist in understanding and creating financial models for real estate.
- Professionals also need strong written communication skills to share their findings in written reports.
- Employers expect appraisers to possess critical thinking skills. Critical thinking and problem-solving skills allow appraisers to analyze data and reach reasonable conclusions. These skills also help professionals adjust for unexpected variables.
- Appraisers must use inductive reasoning to draw conclusions based on available data.
- They also need oral and written comprehension skills. This allows appraisers to better understand what clients want and to follow directions from employers when creating reports that meet appraisal standards.
- To conduct physical inspections of a property, professionals must have the ability to see up-close details of structures.
- Real estate appraisers need knowledge related to building and construction methods and materials.
- They must also know about building codes and zoning bylaws, as well as how these might affect a property’s value.
- Successful real estate appraisers possess knowledge concerning real estate law and know how to meet appraisal standards in their practice.
- As a prerequisite for a job in real estate appraisal, most professionals need to understand analytical financial analysis. They may also need to know how to use business intelligence software.
Learn More About How to Become a Real Estate Appraiser
HOW ARE REAL ESTATE APPRAISERS EMPLOYED?
- LOCAL GOVERNMENT
Many real estate appraisers work for local government agencies, as either appraisers or assessors. Their duties may include maintaining legal records and performing assessments for property tax determinations on commercial properties.
- REAL ESTATE
In the real estate industry, appraisers may work under a broker or employ themselves, often specializing in residential properties. They also fulfill a vital role by helping form accurate financial models for the housing market.
- STATE GOVERNMENT
State government agencies employ a large number of real estate appraisers, where their services come in handy for maintaining records that assess and appraise different properties. These professionals also play a role in property tax determination for commercial properties.
- CREDIT INTERMEDIATION
Intermediary entities that lend funds for activities such as mortgage or loan brokerage often employ real estate appraisers.
- LAND SUBDIVISION
Real estate appraisers regularly evaluate land and create diagrams to help support their findings in appraisal reports. This expertise comes in handy when subdividing land in the construction industry.
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PROFESSIONAL ORGANIZATIONS FOR REAL ESTATE APPRAISERS
- National Association of Real Estate Appraisers
Founded in 1966, NAREA establishes standards and guidelines to advance the real estate appraiser profession. It offers members access to education, training, job assistance, and recognition in the form of awards and designations.
- Appraisal Institute
AI advocates for appraisers in real estate and other specialty areas by providing education, specialized designations for members, and several publications on contemporary appraisal issues.
- American Society of Appraisers
Established in 1936, ASA is the world’s largest multidisciplinary association for appraisers. Real estate appraisers can join the organization to gain access to professional development opportunities and an annual conference.
- The Appraisal Foundation
This foundation sets the congressionally authorized standards for the real estate appraisal profession. It offers voluntary guidance for valuation professionals, including online and in-person courses for real estate appraisers.
- National Association of Appraisers
NAA promotes all appraisal professions through a nationwide network of partner organizations and committees. Members enjoy access to an annual summit, where they can network and take courses on topics such as appraiser management.