APPRAISAL PROCESS

Calvin W. Moye, IFAS
Today is the age of specialization and the real estate profession is no exception to the rule. Real estate appraising is a complex field. The sale of your home, business or any "real property" may be the largest transaction of your lifetime. Appraisers' opinions can play an important part in almost any real estate transaction for this reason a NAIFA Independent Appraiser should be consulted.

An appraisal is an opinion of value or the act or process of estimating value. This opinion or estimate is derived by using the three common approaches, all derived from the market.
They are:
1. Cost Approach to value is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the Physical Deterioration, the Functional Obsolescence and the Economic Obsolescence. The remainder is added to the Land Value.
2. Comparison Approach to value makes use of other "bench mark" properties of similar size, quality and location that have recently sold. A comparison is made to the subject property.
3. Income Approach to value is of primary importance in ascertaining the value of income producing properties, has little weight in residential type properties. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.
Then, after thorough analysis of all general and specific data gathered from the market, a final estimate or opinion of value is correlated.

Before engaging the services of an appraiser, it is advisable to thoroughly check the qualifications of the appraiser. The National Association of Independent Fee Appraisers conducts a professionally recognized testing and certifying program, so, you can rest assured when you chose an appraiser from NAIFA's on-line Appraiser Directory!
NAIFA was founded in 1961 as a non profit professional association of real estate appraisers. Today, the Association has chapters through­out the United States, Canada, ∓mp;mp; Mexico.....and continues to grow both in number and in stature.
The Association's objectives are to raise the standards of the appraisal profession, gain recognition for its' members as qualified professionals, and to promote fellowship among appraisers. These objectives, professionally recognized testing, and a certifying program, affords reasonable assurance to the general public of the professional expertise, integrity, and responsibility of the NAIFA members.
NAIFA's Professional Designations include four member categories:

• Member, IFA Designation
  
• Member/Agriculture, IFAA Designation
  
• Senior Member, IFAS Designation
  
• Appraiser/Counselor, IFAC Designation
  

MEMBER [IFA] Must join the Association as a Candidate, pass a written examination and submit a narrative appraisal report meeting the Association's requirements. The report must be approved by the National Education Committee and the Candidate must also meet the educational and appraisal experience requirements outlined by the Association.
MEMBER/AGRICULTURE [IFAA] Must join the Association as a Candidate or be a Member [IFA] and meet minimum experience requirements for Senior Member [IFAS], successfully pass the IFAA comprehensive examination, submit a narrative demonstration report on an agricultural property conforming with prescribed guidelines and also meet appraisal educational and experience requirements as outlined by the Association.
SENIOR MEMBER [IFAS] Must join as a Candidate and first meet the requirements for the Member [IFA] or be a Member [IFA], successfully pass the Senior Member Examination, submit a narrative demonstration report on an income producing property conforming with prescribed guidelines and meet educational and experience requirements as outlined by the Association.
APPRAISER/COUNSELOR [IFAC] An Appraiser/Counselor must have been a Senior Member [IFAS] for three [3] years and have five [5] years experience in counseling prior to submitting a thesis of an actual counseling experience. The thesis must be approved by the National Education Committee with final approval of the Appraiser/Counselor by the National Board of Directors. The Appraiser/Counselor with IFAC designation is the Association's highest recognition of proficiency.
HOW YOU MAY HELP

Once you have selected an appraiser, be prepared to answer the following questions or have as much information as possible:
1. Purpose of the appraisal.
2. The required completion date of the appraisal.
3. Provide a copy of deed, survey, purchase agreement or other pertinent papers  pertaining to the property.
4. Is there a mortgage? If so, with whom, when placed, for how much, type of mortgage [FHA, VA etc.], interest rate, and any other types of financing?
5. Copy of current real estate tax bill, statement of special assessments, balance owing and on what [sewer, water, etc.].