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Frequently Asked Questions on Real Estate Appraisals

WHAT IS A REAL ESTATE APPRAISAL?
An appraisal is an independently prepared, objective opinion of value on a specific property as of a specific date prepared by a qualified appraiser. The appraisal report should be a "stand-alone" document that leads the reader to a logical opinion of value.

CAN A REAL ESTATE BROKER'S OPINION OF VALUE BE CONSIDERED AN APPRAISAL?
No, to be accepted by attorneys and courts, appraisals must be prepared by a licensed real estate appraiser.

WHAT IS VALUE?
While different types of value exist (insurance value, replacement value, value in use) the most often used form of value in the sale of real estate is market value.

WHAT IS MARKET VALUE?
The most probable price that a property should command when a property is exposed to an open and competitive market and the buyer and seller are well informed and typically motivated. The value represents the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for the sale of real estate.

WHO NEEDS AN APPRAISAL?
In real estate purchases - anyone who is purchasing a home with a mortgage. Anyone purchasing real estate without a mortgage does not require an appraisal. Real estate appraisals are typically needed in refinancing mortgages, estate settlements, removal of private mortgage insurance, divorces and tax appeals. Many real estate purchasers have also required appraisals to corroborate the value of real estate purchases.

DOES COST EQUAL VALUE?
No, it is important to understand that cost does not equal value - spending $40,000 to finish a basement does not make a $500,000 house worth $540,000.

HOW LONG DOES IT TAKE TO COMPLETE AN APPRAISAL?
Usually, residential appraisals take about one hour to complete the inspections and 48 hours to complete the necessary market research and write the report.

 

Created and Maintained by WSI.