Appraisal Definition

An appraisal is a professional appraiser's opinion of value. The preparation of an appraisal involves research into appropriate market areas; the assembly and analysis of information pertinent to a property; and the knowledge, experience and professional judgment of the appraiser. 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.

At minimum, all states require appraisers to be state licensed or certified in order to provide appraisals to federally regulated lenders. Appraisers have fulfilled educational and experience requirements and must adhere to strict standards and a code of professional ethics.

Most appraisals are reported in writing using industry accepted forms. A written appraisal report generally consists of a description of the property and its locale; an analysis of the "highest and best use" of the property; an analysis of sales of comparable properties; and information regarding current real estate activity and/or market area trends. The value indicated by recent sales of comparable properties, the current cost of reproducing or replacing a building, and the value that the property's net earning power will support are the most important considerations in the valuation of real property.

Below is a list of typical types of uses in real estate appraising:

                     Estate planning and estate settlements

                     Tax assessment review and advice

                     Eminent domain and condemnation property issues

                     Dispute resolution-including divorce, estate, zoning issues

                     Feasibility studies

                     Foreclosure

                     Cost / benefit or investment analysis

                     Land utilization studies