Frequently Asked Questions

What is a Real Estate Appraisal?
An appraisal is the act of estimating or developing an opinion of value of real estate, which is generally a parcel of land and those things permanently affixed to the land. Real property is generally considered the interests, rights and benefits of and in a parcel of land.
Most appraisals are to estimate market value for lending purposes. Such appraisals are generally controlled by the requirements of USPAP (Uniform Standards of Professional Appraisal Practice) and the licensing authority of the state.

What is market value? Market Value is defined as:
"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in the definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
1) Buyer and seller are typically motivated;
2) Both parties are well informed or well advised, and acting in what they consider their own best interests;
3) A reasonable time is allowed for exposure in the open market;
4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto;
5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sale concessions granted by anyone associated with the sale.

When do I need an appraisal? There are many occasions for the need of an appraisal. Most appraisals are performed for lending purposes. This may include financing the purchase of a home, refinancing an existing mortgage, obtaining an “equity line” or removal of PMI (private mortgage insurance). Appraisals may also be used to settle an estate, to determine replacement cost for insurance, to contest high property taxes, to determine a listing or selling price, or to dissolve a partnership or divorce.

Who are appraisers? Appraisers are professionals that specialize in property valuation. State licensed appraisers have taken and passed the state exams. In addition, the State of Oregon and the ACLB also require new appraisers to work as an assistant under the supervision of a licensed appraiser for 2000 hours before they can apply for the state exam and work independently.

Can my real estate agent do my appraisal? Real estate agents frequently do “appraisals” to assist buyers and sellers in making decisions concerning listing or purchasing of real estate. These “appraisals” are usually called “comparative market analysis” or “brokers opinion of value”. A fee may or may not be charged for these values. For mortgage lending purposes however, the lender will probably require the appraisal to be done by appraiser licensed by the state of Oregon.

What to expect when the appraiser arrives? The home inspection is one of the first and most important steps in the appraisal process. This is your best opportunity to converse with the appraiser, and notify him of features that are not readily observable by the appraiser (ie. Hardwood flooring under carpet, etc.). The appraiser or his assistant will contact you and make an appointment to come out and inspect the property. While making the appointment, the appraiser may ask you for certain items that will assist him in completing the appraisal faster. These items may include a (plat map, and or floor plan (blueprints) if readily available), list of improvements or upgrades made to the property since the last appraisal, approximate square footage, type of heating/cooling, how many bedrooms, garage type, and information regarding any homeowners association or management company to whom you pay mandatory dues.

What to expect when the appraiser arrives? Part 2 The inspection will usually last from 35 min. to 1 ½ hrs. depending on the size of the house and the complexity of the floor plan. The appraiser will take photographs around the entire exterior of the home and possibly some interior photos depending upon the lenders requirements. The appraiser will measure the house and other improvements to determine the gross living areas and the areas of the improvements such as basements, utility buildings, garages, carports, decks, patios and porches. He will probably make a sketch of the house as he walks through the property labeling each room and taking notes on interior and exterior features. The appraiser will then take this information to his office to compile this data along with other resources to make an opinion of value.

What happens after the inspection? When the appraiser has the appropriate information he will begin the report writing process. Value is based off much of the information gathered during the inspection. The appraiser will use two approaches to determine value – replacement cost and comparable sales. For comparable sales - the appraiser will look for property types similar to the subject in the subject neighborhood. Adjustments will be made to reflect differences in gross living area, additional structures, lot size, quality, bedrooms, baths, garages, etc., and for replacement cost, a reasonable estimate of how much it would cost to rebuild a similar structure. When the land value is added to the cost approach the two figures should confirm a close range of value. When appraising rental properties a third approach to value is given. The appraiser will perform a rental analysis for other similar rental properties in the area (homes requiring a rental survey will incur an additional fee). The appraiser will now input this information into his computer and work up a report. This can take from three to eight hours to input all the information into the appropriate form.

If I pay for the appraisal, do I own the report? Not necessarily. The appraisal is actually owned by the client who ordered the report, typically the lender or mortgage broker. If the lender engages the services of the appraiser and orders the appraisal, then the lender owns the appraisal, opinions, conclusions, and value estimates contained in the report, even if you (the borrower) paid for it. If you order an appraisal yourself and the appraiser names you as the client in the report, then you own the appraisal. Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report if you request it in writing, regardless of who ordered the report.


Contact Shad Russo for your home appraisal today!