Real Estate Appraisal

An appraisal is an independent estimate of the value of a parcel of real estate by an appraiser using standard and approved methods. In many states, appraisers are required to be licensed.The appraisal report is a detailed listing of the appraisal that is usually done for the lender of the property, or by the owner, usually to establish a selling price. Most appraisal reports are based on preprinted forms, such as the Uniform Residential Appraisal Report, that comply with the Uniform Standards of Professional Appraisal Practice (USPAP) guidelines and are required by federal agencies that may be involved in the sale of the property, such as a federal bank lending money for the property. The appraisal reportidentifies the real property being appraised; the date of the report; its purpose and intended use; the actual methods used to appraise the property, including methods that were not used; assumptions and conditions that may affect the value of the property; the best use of the real estate; the estimate of the real estate’s value; and it should show compliance with the USPAP guidelines. The USPAP also requires that the appraiser sign the report as a method of certifying it.However, since professional appraisals cost money, real estate agents generally do a competitive market analysis to establish a selling price for a home. A competitive market analysis (CMA) is the estimation of the value of a property by comparing it to similar properties in the same area that have been recently sold. A CMA is not as comprehensive or detailed as a formal appraisal, and also has a bias, since a CMA is usually done by a real estate agent for a property owner to determine the best selling price. A CMA should never be presented as an appraisal.In certain special cases, such as in a divorce or estate proceeding, the bank or attorney handling the case may get a broker’s price opinion (BPO), in which a broker, for a fee, simply drives by the property, takes a picture of it, and fills out a BPO form to give to the bank or attorney.