A Beginner’s Guide to Understanding Real Estate Appraisal
Are you interested in changing careers, learning a new skill, and/or being your own boss, and do you enjoy research, architecture or real estate? Then, perhaps, an appraisal career might be right for you.
But you might be asking yourself, “What does an appraiser do?” In this blog, we’ll tackle that question as well as provide additional information about starting a career as a real estate appraiser.
Take your career to the next level! Check out our licensing classes in your state and get started today.
What Is an Appraiser?
An appraiser is a trained professional who provides an unbiased, independent valuation of property.
Appraisers assess many aspects of a piece of property to arrive at their valuation. An appraiser’s determined value is used in a variety of situations, from real estate transactions to tax assessments and insurance policies. An appraiser plays a crucial role in ensuring that property is valued fairly, which, ultimately, helps protect buyers, sellers, and financial institutions.
What Does an Appraiser Do Every Day?
4 Key Responsibilities
- Conduct Property Valuations: One of the core duties of an appraiser is inspecting properties to establish a value. This doesn’t just involve looking at the exterior; appraisers also examine the interior condition, layout, and features of the home. They’ll look at factors like the size of the property, the number of rooms, the quality of construction, and any recent updates or renovations.
- Analyze Market Data: Appraisers don’t just assess properties in isolation; they also compare them to similar homes or buildings in the local market. By looking at recent sales data, the condition of comparable properties, and neighborhood trends, appraisers form a clear picture of how much a property is worth in the current market.
- Review Property Records: Beyond just examining the physical aspects of a property, appraisers review public records to check for zoning regulations, permits, property taxes, and ownership history, which can all impact a property’s value.
- Provide a Final Appraisal Report: After conducting their research and inspections, all of which are documented in their workfile, appraisers compile those findings into a comprehensive report. This document outlines how they arrived at the property’s value, providing a clear assessment and the rationale behind it, including sales data, comparable home sales, market conditions, and more. This report is often used by banks, mortgage companies, and other financial institutions to determine the amount they’re willing to lend or insure.
Why Are Appraisers Important?
The real estate industry depends on accurate, fair appraisals to maintain stability. Whether a home is being bought, sold, or refinanced, an appraisal helps ensure that both the buyer and lender are making sound financial decisions. Without appraisers, there would be far more guesswork involved in determining property values, leading to potential overvaluation or undervaluation of properties leading to potential lending and financial mistakes.
Where Do Appraisers Work?
Appraisers work in a myriad of sectors, but the most common areas include:
- Residential Real Estate: Appraisers value homes and apartments to determine their market value, often for mortgage lenders.
- Commercial Real Estate: Appraisers evaluate office buildings, retail spaces, and other commercial properties. Commercial appraisal can be more complex, considering factors like income potential, zoning laws, and market demand.
- Agriculture: Farmland, ranches, and land zoned for agricultural development often have unique traits that require a specially trained appraiser with expert knowledge of this industry.
- Tax Assessments: Some appraisers work with local governments to determine property values for tax purposes.
- Insurance Appraisals: Insurance companies rely on appraisers to estimate the replacement cost of a property for coverage purposes.
Outside of industry sectors, appraisers can work for a multitude of businesses, including:
- Appraisal Management Companies (AMCs): These independent companies function as intermediaries between mortgage lenders and appraisers. AMCs ensure that appraisers are not influenced by lenders, and they also perform administrative tasks for appraisers and lenders.
- Bank/Financial Institutions: Banks employ appraisers for mortgage-lending purposes. They need to ensure accurate valuation to determine if they will provide the loan to a prospective home buyer.
- Real Estate Firms: Real estate firms often employ appraisers to provide valuations of for-sale properties. It helps ensure they are listing the home appropriately for their sellers.
- Auction Houses: Outside of real estate, auction houses employ appraisers to help them value the assets they will be auctioning off. This can include all types of assets, including artwork, jewelry, cars, property, clothing, memorabilia, and more.
- Government Agencies: Federal entities require appraisals for diverse uses-acquisition, eminent domain, lease, and more. Appraisers help establish fair market value for these government agencies just as they would in private employment.
- Insurance Companies: These companies often employ appraisers to provide valuations of assets for insurance purposes, like valuing for a policy, deciding how much to pay out on a policy, etc.
- Self-Employed: Most appraisers work for themselves as independent fee appraisers, meaning they are paid by the jobs they complete, not on a salary basis. This can be an attractive aspect of the job.
How Do You Become an Appraiser?
The path to becoming a licensed or certified appraiser involves a combination of education, on-the-job training, and passing state exams. Most appraisers start by completing specific coursework, followed by an apprenticeship under a licensed appraiser. From there, you’ll need to pass your state’s licensing exam and potentially pursue higher levels of certification depending on the types of properties you want to appraise.
If you’re considering a career in appraisal, there are many opportunities to specialize in areas like residential properties, commercial properties, or agricultural land. The key is to receive the proper education and firsthand experience, and that’s where appraisal education companies come into play.
Additionally, once you receive your appraisal license, it must be renewed (most states require a renewal every two years). To renew your license, it requires the appraiser to complete appraisal continuing education classes to stay up to date on the industry.
Why Consider a Career as an Appraiser?
If you’re meticulous, enjoy research, and want a career with flexible work opportunities, becoming an appraiser could be a great fit for you. The job offers a unique mix of fieldwork and office work, along with the chance to play a critical role in real estate transactions. Additionally, as long as there is a real estate market, appraisers will continue to be in demand. Check out this blog for 6 reasons to start a real estate appraisal career.
Ready to Explore Appraisal Education?
Now that we’ve answered the question, “what does an appraiser do?” for you, are you ready to dive even deeper? If you want to discover more about the appraisal profession, McKissock’s appraisal courses are designed to provide you with the knowledge and skills required to succeed in this growing industry.
Whether you’re new to the field or looking to advance your credentials, we offer the resources and guidance to help you on your journey.
Understanding what an appraiser does is the first step toward a rewarding career. Ready to take the next step? Contact us today to learn more about our appraisal courses and how we can help you build a strong foundation in this exciting field!
