What is an appraisal?
According to WiKipedia – A real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property. An appraisal is a combination of objective, factual data and a subjective opinion based on the writer’s training and experience. Real estate transactions often require appraisals because they occur infrequently and every property is unique.

An appraisal provides you with useful information about the property which is identified in several ways including the address, the tax key number and the legal description. Specific details should describe the location, size, style, age and condition, as well as what special characteristics it has or what adverse influences it may have such as proximity to a busy street or industrial enterprise.

An appraisal must be an objective, impartial, unbiased and independent assessment of the value of the property. (Keep in mind that cost does not necessarily equal value.) Included in the appraisal should be a written report (typically on one of the approved form types) maps, photos and may include other documents such as a sales contract or part thereof and or a survey of the lot.

When you borrow money to buy or refinance a home, your lender may order a new appraisal and may require you to pay for it. Your lender may also use other ways to check the value of the home. If you have an appraisal of your own home or a home that you are purchasing, you have a right to receive a copy of the appraisal report no later than three days before closing.

Why get an appraisal?
The most common reasons for an appraisal of your home are for a purchase or for a refinance, although there are numerous other reasons to engage an appraiser. These may include, but are not limited to:

  • Tax appeal
  • Divorce
  • Bankruptcy
  • Removal of Private Mortgage Insurance (PMI)
  • Settlement of an Estate (Probate)

Just to name a few, and there are certainly others.

What are my options if my property taxes just went up?
Once thing you can do is to challenge your new assessment. The best way to do that is with a recent appraisal that shows how your home should be valued based on actual transactions and market conditions in your specific subdivision or neighborhood.
What items can impact the value of my property?
  • Condition – recent updates, maintenance etc.
  • Size
  • Age
  • Location – view, proximity to schools, parks, restaurants, shops etc. as well as access major transportation routes
  • Amenities – porch, patio, deck, fireplace, hot tub – for example
  • Quality of construction
  • The age and condition of the roof, windows, mechanical systems and recent updates/improvement
  • Market conditions
  • Curb appeal and landscaping
What are the three common approaches to valuing my property?
1.) The most widely used method is the Sales Comparison Approach to value. According to basic appraisal principles the sales comparison approach is based on ”the principle of substitution”, which simply states that “the upper limit of value tends to be set by the cost of acquiring an equally desirable substitute, assuming no untimely delays”. A prudent investor would pay no more for a property than it would cost to build or purchase a similar or equal property. The appraiser conducts research about the subject property and its specific characteristics. Then, the appraiser uses search tools such as the Multiple Listing Service and the Municipal Assessor’s files to seek out recent sales of similar properties in the subject market area. Depending on the sales activity this information may be plentiful or may be scarce. The salient characteristics are entered into a grid and adjustments are made for similarities and differences between the subject and the comparables. The result is likely to be a range of prices providing a reasonable estimate of market value. Depending on the quality and quantity of data, the sales comparison approach will be more or less reliable.

2.) The second approach to value is the Cost Approach which is most typically used for new construction properties or properties which have been recently fully renovated and may be like new. Most often the appraiser will use Plans and Specifications for the subject property in addition to the value of the lot, builder carrying costs, overhead and profit. The Marshall & Swift cost estimator guide may also be employed.

3.) The third approach to value is the Income Approach. This approach is used when the property is an investment property which has the potential to derive income from rent. It may be a single family home or may be a multi-unit property. The appraiser is provided with actual rental data from the property owner or management company and then compared with other, similar rental units in the market area. Several additional sections are added to the typical appraisal report which calculate items such as vacancy loss, management fees and anticipated repairs or improvements. The appraisal of income producing properties most often combines the use of the sales comparison and the income approach to value.

What is the cost of a typical appraisal?
Fees are based on the complexity of the appraisal, not the value of the property. A typical full interior appraisal on a condominium or single family home ranges from about $375 to $500 unless it is complex. For example a water front property, can cost more than $1000. A two to four unit appraisal is typically between $500 and $700.
Can I use an old appraisal? How long does an appraisal last?
The market will determine the life of an appraisal. Markets change quickly based on the time of year, interest rates, inventory and overall economy. Lenders require appraisers to provide the most current market data available.
What are your turnaround times?
A typical turnaround time for Landhaus is 6 days although it may depend on how busy the appraiser/the market are:

  • Day 1: Data Validation
  • Day 2-3: Property Visit
  • Day 4-5: The report is written & data verifed
  • Day 6 Completed report is submitted to the client

    Rush orders upon request for an additional fee

What is the difference between an appraisal and a home inspection?
Inspections and appraisals are both important. Buyers should do both to protect their financial investment.  Inspections and appraisals are for different purposes, but both give the buyer information to avoid financial missteps.

The main differences are that an appraisal deals with the value of a home, and the inspection deals with the condition of the home.

Most often, the goal of an appraisal is to deliver an impartial, unbiased, professional opinion of the fair market value of a property.

A Home Inspection is a detailed and more thorough inspection into the condition of the home.  A licensed home inspector will spend several hours analyzing the condition, both visually and by testing major components and mechanical systems.  Following the home inspection, recommendations are made through a detailed report with photos on items  that require repair or may be nearing the end of their useful life.

What is the difference between a short form report and the URAR?
The URAR (Uniform Residential Appraisal Report) is relied on primarily by the primary and secondary mortgage market.  It contains items and requirements that are not necessarily required in order to estimate value.

Both reports rely primarily on the direct sales comparison approach to value.

Short form reports may be better suited for tax appeal, gift and estate tax purposes, helping a seller price a property, assisting a buyer in determining what price to offer or pay for a property or an uncontested divorce.

Can I get a copy of my appraisal?
Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request.   The appraiser’s client is the lender or financial institution that hired the appraiser (ordered the appraisal), not the seller or borrower. The appraiser can not provide a copy of the appraisal to anyone but the client even though they may be paying for the appraisal. The appraiser is bound to professional standards and a code of ethics, which does not allow the appraiser to publicly release the appraisal.
Do you provide comparable services?
No. Requests for appraiser services commonly known as: comp checks, value checks, pencil searches, look-ups, preliminary evaluations, study, analysis, etc. are in fact “appraisals”. Any time that a licensed, or certified appraiser expresses an opinion of value, a value range, a relationship such as more than or less than, or even selects a range of comparables, it is considered an “appraisal”.
What is a comparable sale?
A comparable sale is a property, similar to the subject property in location, style, age, condition, etc. that has recently sold in an arms length transaction. An arms length transaction is one in which both seller and purchaser act completely independent of each other and have no connection or relationship. The selection of comparable sales, in most cases, is the single most important factor in estimating value. It is the appraiser’s responsibility to research the local market and determine which comparable sales most accurately reflect the characteristics and amenities of the subject property.
What property repairs make the most value to an appraisal?
Any needed repairs to ensure human safety and then mechanical systems and those to protect the property from fire, water damage are most important. After that cosmetic repairs such as repairing or repainting the bathroom ceiling or repair of loose or damaged tiles.
Does an appraisal include a property visit?
An appraiser will come to the property and schedule the appointment thru the client.
What is the difference between assessed value and appraised value?
Appraised value is primarily the market value of the property. This is, in essence, should be the same as the FMV, or Fair Market Value. Assessed value is the value your municipality places on your property for tax purposes.

What is PMI (private mortgage insurance)?
If you put less than 20% down towards the purchase of your property, you can safely assume that you are currently paying for PMI, Private Mortgage Insurance. This additional premium is being paid by you with every payment to insure the lender in case you default on your loan. If you have paid your mortgage down or if your property has appreciated enough, you could have this insurance premium removed. Even if you buy your house considerably below the appraised value, you typically need 1-year seasoning on your loan.

Some mortgage companies require at least 2 years. After this waiting period you can make the request. Call your mortgage company customer service and ask for full instructions for the PMI removal. Most mortgage companies want to know that you have at least 20% equity in the property. In order to determine the value most mortgage companies will require a fee based appraisal from a State Licensed or Certified Appraiser.

What does it take to be a licensed appraiser?
Many states require all real estate property appraisers to be, at a minimum, state licensed or state certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the   Appraisal Foundation.

To see the specific requirements for any state use this link: www.appraisalfoundation.org/imis/TAF/About_Us/ 

How can I verify an appraiser's licensing status?
Please go to the Appraisers License Verification site: www.asc.gov/Pages/FindAnAppraiser.aspx 

Do I have to be at home? Are there interior and exterior only appraisal options?
You do not need to be home for a property walk through. For most sales, the seller is typically not home and many homes have been vacated prior to the appraisal process. For a refinance, the borrower is typically at home and can answer questions but it is not required. Exterior only appraisals are less common but have their place when a smaller loan amount is requested.
What certifications, insurance, and credentials are needed to appraise property in Wisconsin?
The requirements to become a licensed or certified appraiser has been undergoing review. There is a shortage of qualified appraisers in the US at the current time. At minimum, an associates degree is required. Then advanced coursework through an accredited appraisal program followed by several hundred hours of on the job training and finally a state proctored exam.
Can you appraise property that is not in Wisconsin?
Many states have reciprocity but an appraiser must be licensed in each state that they conduct work in.