Overview of a Real Estate Appraisal

Real estate appraisal, also known as property valuation or land valuation, is the process of valuing real property. Appraisals are needed in any real estate transaction, whether purchasing or selling a property, to properly determine the property's value. There are three different types of appraisals: Appraisal with Self-Contained Report, Appraisal with Summary Report, and Appraisal with Restricted Use Report. Appraisal with Self-Contained Report is the most complete report available. It contains a full reporting of the appraisal process, complete details on comparable data, area and market analysis, etc. It is the most time-consuming to complete and so has the highest appraisal fee. Appraisal with Summary Report is the most common appraisal assignment. It involves a documented narrative or multi-page form report with an adequate explanation of the appraisal procedure and data used in the valuation. Appraisal with Restricted Use Report is an abbreviated report. The report is a brief letter with no supporting data included. It is not designed for use by third parties or for new money mortgage purposes and so has limited application. Below is a link to a sample real property appraisal:

http://jamesdoughertyappraisers.net/ListingAppraisalSample.PDF

When it comes down to it, appraisals are one qualified individual's opinion of a property's value, but an opinion nonetheless. Therefore, it is hard to determine an appraisal to be of "bad" quality. However, an appraisal can be determined to be inaccurate for a variety of reasons, for example not including all of the relevant property information into the appraisal. Appraisers are perceived as a necessary element to any real estate transaction. Their expertise is needed for both sides of the transaction (buyer and seller) as well as third parties involved (lenders, etc.). Unfortunately, with the information that can be obtained from the internet and new programs for property valuation being introduced, it is possible that the appraisal profession could begin to decline and eventually become obsolete. The appraisal profession was created to protect consumers, however with safe alternatives such as computerized valuation services coming out, the amount of jobs in the appraisal industry could be at risk. Lenders are also backing these computerized valuation services and trying to push appraisers out of the picture. Below is a link to a YouTube clip discussing the matter and endorsing a recently published book regarding this topic:

http://www.youtube.com/watch?v=lR0Z7brAnhI

It is estimated that the appraisal industry will grow at a rate of 7% until the year 2020, which is slower than the average rate for all occupations. Although these statistisc do forecast growth, it shows signs of decline in the industry. Real estate appraisers can expect more and more competition as the years go on, and increased risk as uncertainty mounts in the industry.