Frequently Asked Questions about Property Appraisals and Property Appraisers
Q. What is an appraisal?
A. According to the Uniform Standards of Professional Appraisal Practice (USPAP), which govern our industry, a real estate appraisal is "an opinion of value." Note that the value of your real estate is only an opinion; not a set in stone fact. What your property is actually worth will not be determined until it has been sold. It is entirely possible that two different appraisers may arrive at different values for the same piece of property. Legally, it is also possible that both of the appraisals are correct. Provided you engage the services of a capable and experienced professional, you will likely receive an appraisal that is very close to the actual selling price of the property in question.
Q. Will you have to come inside the house to do the appraisal?
A. Yes. Depending on what type of loan you are getting (VA, FHA, etc.), we may have to measure and plot the location of each room and conduct an inspection of the attic and check to see that some of the major systems of your home are in working order. This is a cursory inspection and in no way is to be considered a bona fide home inspection. Also, if we think you may have some functional obsolescence, we will need to measure the inside of your house. We will also need to take some pictures of the inside and outside of your home.
Q. How long does an inspection of my home take?
A. Generally from one to three hours. We know your time has value and we always try to be on time. If we are running behind, we will always try to contact you and let you know. If we no show for your scheduled inspection and it's due to a circumstance within our control, we will discount your appraisal or otherwise try to offer some reasonable compensation.
Q. Regarding a residential property appraisal; how is value determined?
A. Usually it's determined by examining recent past sales of similar properties in a given neighborhood. Note that an appraisal opinion of value is determined by using past sales. It is not possible to predict future value. Real estate appraisers can only offer an estimate or opinion of value based on what similar properties to yours have recently sold for.
Q. I need to borrow $200,000 on my house and the bank told me that they told you that's what I need to borrow so how come you did not appraise my house for what I needed to borrow?
A. Because arriving at a predetermined conclusion of value is ILLEGAL!!!! (see 2006 edition of USPAP guidelines, ethics rule, page 7). Unfortunately, it is not uncommon for mortgage brokers or other financial institutions to pressure appraisers to come up with the value they need to make the loan. The overvalued property loan package is then sold to an entity like fannie mae or freddie mac who then risks taking a large loss at sale if the loan goes into default.
Q. I paid for the appraisal so why can't you tell me anything about it?
A. Legally, the client is the person or organization who orders the appraisal. Even though you have paid for the appraisal, if you are not the one who ordered it, bank privacy laws prohibit the appraisal company from disclosing information about the appraisal. However, if you are the loan applicant you are entitled to a copy of your appraisal. This must be furnished to you by the financial institution in a timely manner. At Vector Appraisal we try to obtain confidentiality waivers from our financial institution clients and other customers so that we may use the subject property as a "comp" in a future appraisal or for other such necessary purposes. If we have a confidentiality waiver on file from your financial institution, we will furnish you with a free email copy of your appraisal or for a cost not to exceed ten dollars plus postage we will mail you a hard copy. You may still obtain a free copy from your financial institution though.
Q. Do real estate appraisers need to be licensed in Ohio?
A. Yes. As of January 1, 2007 Ohio became a mandatory license state. All real estate appraisers need to be licensed in the State of Ohio.
Q. Will my appraisal be done by a state licensed appraiser or a supervised appraiser trainee?
A. Unless a client specifically requests otherwise, it is not uncommon for a supervised trainee to work on or complete your appraisal. It is necessary to use trainees because of the extensive educational and field training experience necessary to become an appraiser. Currently, state licensed residential appraisers must have 2000 hours of field appraisal experience plus over 90 hours of classroom experience before they can sit for the state exam (which takes many people two or three times to pass). At Vector Appraisal if you are not comfortable with a trainee working on your job, you can request that only a state licensed appraiser work on your appraisal report. There is an additional fee for this, however.
Q. Why does an appraisal cost so much?
A. In addition to the aforementioned training and educational requirements, there are other significant expenses associated with starting and maintaining a reputable appraisal company. Start up costs can range from $20,000 to $40,000 or more. Professional liability insurance costs are very high as well. Shortly, there will be additional education and training requirements for appraisers and in 2008 even more sweeping educational and field training requirements will be enacted. Recurring monthly expenses for an appraisal company can exceed several thousand dollars. Another important factor is that in Ohio appraisers are regulated by the Ohio Department of Commerce Division of Real Estate and Professional Licensing. Unlike many professions where it is almost impossible to have someone suspended or have their license revoked, the enforcement arm of the ODOC routinely suspends or revokes the licenses of real estate appraisers. Accordingly, reputable appraisal firms have to charge enough for an appraisal to cover the significant costs and risks of engaging in this type of business.
Q. Just how long does it take to complete an appraisal?
A. Under normal business conditions, which we will define here as one to three appraisals per day per appraiser, your appraisal can generally be completed in 24 to 48 hours after we conduct our inspection of the subject property. During periods of high demand for appraisal services, it can take up to several weeks to get an appraisal done. Nobody wants an appraisal to take this long and you can be assured that at Vector Appraisal we do the best we can to give you a thorough and complete appraisal in a timely manner.
Q. How do I file a complaint against an appraiser?
A. As previously mentioned, in Ohio state licensed real estate appraisers are regulated by the Ohio Department of Commerce-Division of Real Estate and Professional Licensing. You can call the state and complain about an appraiser for anything, but a truly legitimate complaint about an appraisal report will involve errors that are a violation of USPAP or deliberate omission or falsification of information that results in a material change in the legitimate estimated value of a property. If an appraisal has been properly completed but you do not like the value the appraiser came up with, your complaint will not be considered valid. You can always hire a different company to come out and reappraise your property, but if the first and subsequent appraisals you have done have all followed USPAP guidelines and contain no deliberately false or misleading information, you still may not see a drastic difference in your property's value.
Q. How long is an appraisal good for?
A. Technically, an appraisal is only good on its effective date ( this is the day we conduct the inspection and/or check the "comps" and may be a different day than the day the report was completed). Financial institutions may consider an appraisal to be usable for several months. You would have to contact your lender to see how long you can use your appraisal report.
Q. If I do not like the value do I still have to pay for the appraisal report?
A. Yes; as long as the report is properly done and in compliance with all applicable rules and regulations.
Q. I notice some appraisal companies charge more for an appraisal than other companies. If I pay more for an appraisal do I always get a better job?
A. The saying "You get what you pay for" is a general truth rather than an absolute truth. There are times when you can get a good low cost appraisal, but that is more than likely an accident rather than a truly desired result. Folks, it takes time to gather and compile the information used in an appraisal. It takes hours to properly analyze comparable sales. Let's say one appraisal company charges $200 for a basic appraisal and another company charges $400 for a basic appraisal. The company that charges $200 does a quick check of your comps (because they cannot afford to spend much time studying them) and arrives at an estimated value of $160,000 for your house. The company that charged $400 can afford to spend more time analyzing your comps and comes up with an estimated value of $175,000. Assuming each value would reflect the actual sale price, you would have spent an extra $200 for the second company's appraisal but you would have made an extra $15,000 on the sale of your house. The more time one has to analyze comparable sales, the more accurate the value will be.
Vector Appraisal, LLC, 835 County Road 32 North, Gibsonburg, OH 43431
Phone: 419-637-2226, Fax: 419-637-2218, Cell Phone: 419-559-3888
© Copyright 2007 Vector Appraisal, LLC.,
All Rights Reserved.