What Does a Real Estate Appraiser Do?
Find out how an appraiser can help you make smart real estate decisions.
Navigating today’s ever-changing real estate market can be tricky. An appraiser can provide you with the objective data and analysis you need to make smart real estate decisions. We stress the word objective because our role is to use our experience along with data to provide you with information grounded in reason and logic. (Even if sometimes that information is not exactly what you want to hear!)
Yet, many people, even some of our clients, do not fully understand what a real estate appraiser does. “An appraiser’s job is to provide a client with a supportable opinion of value,” explained Alexander Argianas, Argianas & Associates Vice President. “This is done by collecting facts, statistics, and other information specific to the property such as its history, a regional analysis of the area, land zoning, a demographic profile of the area as well as countless other factors. A site visit is conducted to gather additional information that can’t be found in other means. Then we rely on our over 150+ years of combined experience to analyze that data and prepare a customized real estate valuation report.”
A common misconception is that an appraiser and a property inspector provide the same service. Although both services are extremely valuable, there’s a marked difference between the two. While an appraiser provides an opinion of value based on an inspection of the building, a building inspector is solely focused on a review of the individual components down to the granular level. To explain further, the Appraisal Institute, an international association of professional real estate appraisers, states, “The role of the appraiser is to provide objective, impartial, and unbiased opinions about the value of real property — providing assistance to those who own, manage, sell, invest in, and/or lend money on the security of real estate.” Whereas an inspector’s role, as defined by the American Society of Home Inspectors, is “To conduct a visual examination of the physical structure and systems of the property, usually in connection with a sale.”
At the end of the appraisal valuation process, an appraiser submits a narrative, multi-page appraisal report that is unique to your property. “Your report is more than just one single number, more than simply the estimated value of your property,” explained Alexander. “It’s a comprehensive, 360-degree analysis for you and any other intended user to fully understand every aspect of the land and property. Especially in today’s market, knowing the best use for your real estate is key. Property is often a large investment for people and companies, and an appraisal report is a tool to help you determine what you should be doing with that property.”
In contrast, a property inspector’s report focuses solely on the more granular aspects of the condition of the property such as heating and cooling systems, interior plumbing, electrical and structural components, etc. An inspection is typically conducted either before a property is listed or after it is sold to identify any current or future repairs that may need to be addressed. A property inspector’s report may tell you what you should change or repair to improve the property while an appraisal report focuses on how your real estate functions within the community and the economics attached.
An appraisal can certainly be done in conjunction with a sale, but there are many other instances when it is needed. Appraisals are conducted for a whole host of reasons including:
• Mortgage lending
• Estate planning
• Tax assessment appeals
• Business mergers or dissolutions
• Lease negotiations
• Government acquisition of land
• Arbitration and litigation support
• Market studies
• Any opportunity where it is vital to understand the full picture of piece of real estate as it relates to your assets as an individual, company or other entity.
“You would never want to enter into any of these situations unless you were 100 percent certain that you knew the true value and best use for your property,” explained Alexander. “An appraiser has to adhere to the strictest government and industry guidelines and can offer you an experienced and objective perspective. You simply can’t get that information from an online algorithm, looking at comps of properties sold in the area, or a yearly tax assessment. It is the analysis and application of all that data where an appraiser can truly become an extension of your board of directors.”
Just as you have a lawyer and an accountant to help guide your business, we recommend making sure that you have a trusted appraiser in your network. For more information on our complete list of services, visit the “What We Do” section of our website.