Appraising and the appraisal process
Wednesday, April 11, 2012
By Charles S. Bonamer
ORRA class instructor, Brokerage Management
Generally accepted appraisal concepts should be comprehended by the residential real estate broker and agent. The agent who lists or sells and the appraiser who validates the value conclusion are part of the same team. Encourage agents to attend appraisal courses.
I - An appraisal may be referred to by many names. An associate who responds to questions such as "What is it worth?” and "What can I get for it?” may be rendering an appraisal.
A. The purpose of an appraisal is always to determine a value.
- The function of the appraisal is what the principal does with the report.
- The appraisal is concerned with the purpose, not the function, of the appraisal.
B. An informed opinion of value, rendered by a licensee in a professional capacity, may constitute an appraisal.
C. Some court decisions have rules that a telephone opinion of value may constitute an appraisal. Although no fee is charged, the obligation to accurately reflect value is significant.
II - Appraising real estate is the process of estimating market value of real property. Some contend appraising is an art form based on science. Others assert it is a science based on an art form. There is an implicit listing price, market value, for any real property.
A. Real estate priced higher than market value has a tendency to sell for less than market value, if it sells at all. It becomes stigmatized in the marketplace. An implication is that there is something wrong with the property, or it would have sold. After an excessive period of time, the owner accepts less than market value just to get the property sold.
B. It does not serve the principal to value or list real property for more than market value.
III - Only a certified appraiser can render a certified appraisal. Individuals, not firms, must obtain certification.
Charles S. Bonamer is the instructor of ORRA’s Brokerage Management course, which is offered monthly and worth three continuing education credits. Class dates, more information, and registration are available via the online ORRA Calendar.
Reprinted from the Florida Real Estate Brokerage Management manual, by Charles S. Bonamer. Copyright ©1987-2012 by TRANS-EQUITY, Inc.