Appraisal Services FAQ

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Frequently Asked Question

Appraisal Services FAQ: Addressing General Questions from Numerous Clients

Our customers usually have these questions about our appraisal services:

An appraisal is an estimate of the value of a property, typically performed by a licensed or certified appraiser.

An appraisal is important because it provides an unbiased estimate of the value of a property, which can be used for a variety of purposes, such as determining the price to list or sell a property or determining the amount of a loan that a lender will approve for a mortgage.

How is the value of a property determined in an appraisal?

There are three general groups of methodologies for determining value. These are usually referred to as the “three approaches to value” which are generally independent of each other:

The Cost Approach – this is the theory where the value of a property can be estimated by summing the land value and the depreciated value of any improvements. The Cost Approach is considered most reliable when used on newer structures, but the method tends to become less reliable for older properties. The cost approach is often the only reliable approach when dealing with special-use properties (e.g., public assembly, marinas).
The Direct Comparison Approach – by comparing the property to similar properties that have recently sold in the same area. The appraiser will take into account factors such as the condition of the property, the size and layout of the property, and any special features or amenities that the property may have.
The Income Approach – this approach is used to value commercial and investment properties. Because it is intended to directly reflect or model the expectations and behaviors of typical market participants, this approach is generally considered the most applicable valuation technique for income-producing properties, where sufficient market data exists. In a commercial income-producing property this approach capitalizes an income stream into a value indication.

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Frequently Asked Question

Expert answers to common appraisal questions

How long does an appraisal take?

The time it takes to complete an appraisal can vary depending on the complexity of the property and the workload of the appraiser. On average, it can take anywhere from a few days to a few weeks to complete an appraisal.

What is the difference between a professional appraisal and a Realtor’s evaluation?

A professional appraisal and a real estate evaluation are both methods for determining the value of a property, but there are some key differences between the two:

Professional appraisal: This is a formal, written assessment of a property’s value, typically performed by a licensed or certified appraiser. Appraisals are often required by lenders to approve a mortgage loan, and they are typically more accurate and reliable than real estate evaluations.

Real estate evaluation: This is a less formal assessment of a property’s value, typically performed by a real estate agent or broker. Evaluations are not as detailed or accurate as professional appraisals, and they are not typically used by lenders to approve mortgage loans. However, they can be useful for determining a property’s listing price or for negotiating a sale.

In short, a professional appraisal is a more formal and accurate process, done by a licensed appraiser with years of education and experience, which is often required by lenders to approve a mortgage loan. A real estate evaluation is less formal and done by a real estate agent or broker and it is used to determine a property’s listing price or for negotiating a sale.

Why choose an AIC-designated appraiser? AIC Appraisers have diverse competencies that make them successful at what they do, including:

ANALYTICAL THINKING
Ability to analyze information; identify key issues, relationships, or objectives; diagnose opportunities; make inferences and draw logical conclusions.
CONCEPTUAL THINKING
Ability to identify patterns between situations that are not related, and identify key issues in complex situations. It includes using creative, conceptual, or inductive reasoning.
DECISIVENESS
Ability to make decisions based on the analysis of the information presented, despite ambiguity or risk.
FOCUS ON QUALITY
Taking pride in ensuring tasks are completed with a focus on accuracy and quality.
CLIENT SERVICE
Focus on discovering and meeting the needs of your client. There is a genuine desire to help or serve others.

How much does an appraisal cost?

The cost of an appraisal can vary depending on the location, the complexity of the property, and the qualifications of the appraiser. On average, an appraisal can cost anywhere from a few hundred dollars to several thousand dollars.

What is the main difference between the AACI designation and the CRA designation?

Designated Members of AIC hold either an AACI designation or a CRA designation. AACI designations permit the member to perform both commercial and residential appraisals. CRA designations indicate that the member specializes in residential properties.

Do I need insurance as an AIC Member?

AIC has a mandatory professional liability insurance program for all Members (excluding Student and Retired Members). The program’s objectives are as follows:

to create a stable guaranteed source of insurance for Members;
to ensure adequate coverage can be obtained under reasonable terms;
to provide dedicated, professional insurance services to Members at a reasonable cost, directly related to the claims experience of the profession; and
to minimize administrative “red tape.”

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Appraisal Services FAQ