Conditions, and appraiser’s certification, my (our) opinion of the market value, as defined, of the real property that is the subject of this report is $, as of, which is the date of inspection and the effective date of this appraisal. Uniform Residential Appraisal Report File # Freddie Mac Form 70 March 2005 Page 3 of 6 Fannie Mae Form. Select your state to view our extensive library of appraisal continuing education courses. Each course is designed around industry trends to help you generate better income and career advancement. Our online continuing education courses are updated monthly and are state- and board-approved.

• • • • • • When it comes time to buy a new investment property, the bank’s appraisal can make or break a deal. If the property appraises too low, your financing might fall through. In other cases, the bank might approve the loan but require new contingencies, such as a higher down payment—putting you on the spot to fill the gap. Sellers need to be equally concerned about their property’s appraised value. A low appraisal can drastically affect one’s ability to sell the property, particularly to someone who plans on financing the deal instead of paying for it in cash.

Real estate investors tend to pay a lot of attention to what’s happening in the capital markets. Are interest rates rising? Will new construction affect pricing? All of this definitely matters—but too often, the importance of a strong appraisal gets lost. Here’s what you need to know about appraisals, including how the evaluator determines the property’s value and what you can do to set the stage for getting the best possible real estate appraisal. — Real Estate Appraisals 101 What is a real estate appraisal? An appraisal is the act or process of developing an opinion of value.

The valuation process is a systematic procedure that an independent appraiser follows to answer a client’s question about real property value (usually, market value). A real estate appraisal is also commonly referred to as a “property valuation”.

It is important to note that the appraised value is different than the assessed value. The assessed value is determined by the municipality in which the property is located, and can be drastically lower than the appraised value.

When would you need an appraisal? A real estate appraisal is needed whenever a person is financing the purchase of a property, or when an owner is looking to refinance. Someone might also have an appraisal done before listing their property for sale in order to determine a fair listing price; this is particularly helpful if the property is unique and no local comps are available. Appraisals are commonly required during estate sales and divorces, and they can also be used to determine tax liabilities. Who conducts an appraisal?

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Most states require appraisers to be licensed or certified. Appraisers have been specially trained to develop independent opinions of value.

If an appraisal is required as a condition of your loan (whether you’re purchasing or refinancing), the bank will initiate, hire, and oversee the appraisal. New regulations prohibit lenders from having direct contact with appraisers, so most banks will initiate the appraisal through an appraisal management company that has a pool of appraisers from which to draw. If you’re getting an appraisal done to establish the home’s value before you sell, you can hire the appraiser directly. — Understanding Real Estate Appraisals There are three different approaches that appraisers use to determine a property’s value: The Sales Comparison Approach As the name implies, this method compares a property’s characteristics with those of comparable properties that have recently sold in similar transactions. Because no two properties are exactly alike, the valuations of comparable properties are generally averaged to establish a fair market value for the property being appraised. Adjustments can be made as features vary.