An “Appraisal Review” is an opinion on the quality of another appraiser’s work (e.g., its accuracy and compliance). An “Appraisal” is an opinion of a property’s value. The key difference is the subject of the assignment: the appraiser’s work vs. the property. However, a review becomes an appraisal the moment the review appraiser provides their […]
Appraisers must often determine a property’s separate land value (e.g., for new construction, special-use properties, or “highest and best use” analysis), but vacant land sales are frequently unavailable in developed areas. To solve this, an experienced appraiser can analyze sales of improved properties (those with buildings), recognizing clues (like an oddly low price per square
Property appraisal differences are normal because an appraisal is an opinion of value, not a statement of fact. Variations arise from two main sources: 1. Factual Disparities, such as disagreements on the property’s size or age, different effective dates of value, or even different definitions of value (e.g., market value vs. insurable value), and 2.
Eminent domain (also called “condemnation”) is the government’s legal power, granted by the U.S. 5th Amendment, to take private property for public use, provided they pay “just compensation” (fair market value). Unlike 44 other states, Massachusetts law remains broad and allows the controversial practice of taking for private development (“urban renewal”). Appraisers play a critical,
A low appraisal often stems from the appraiser’s legal requirement to be impartial and competent, a mandate established by laws like Dodd-Frank and USPAP to protect lenders from risky loans (a lesson learned from the 1980s S&L crisis and the 2008 recession). Unlike agents, buyers, or sellers who have a financial stake in the outcome,
The Cost Approach in real estate (which calculates value as Land Value + Construction Cost – Depreciation) is used to determine a property’s worth, but it highlights that cost does not equal value. The crucial factor is depreciation, which an appraiser subtracts from the construction cost. Depreciation accounts for all the reasons a buyer would
An appraiser’s report format (e.g., oral, written narrative, or standardized form) is chosen based on the client’s needs and the “intended use” of the appraisal. All reports must comply with USPAP (Uniform Standards of Professional Appraisal Practice). For residential properties, standardized forms (like the URAR 1004) are almost always used to meet the requirements of
Easements are rights held by others (like utility companies or for access) that limit a property’s usability, reduce its buildable area, and can even restrict future development (e.g., historic or conservation easements). Appraisers must identify these, as they directly impact property value. The most reliable valuation method is the “before and after” analysis, which calculates
In the Income Approach to property valuation, appraisers must first calculate a property’s Net Income by analyzing its expenses. These expenses are categorized as Fixed (e.g., real estate taxes, insurance) which do not change with occupancy, and Variable (e.g., maintenance, cleaning, management) which do. Appraisers rely primarily on the property’s actual operating history for this
You almost always need a new appraisal rather than an “update” if the intended use, client, or effective date is different from the original. An appraisal for a mortgage (lender) cannot be reused for a tax abatement (assessor) because their definitions of value and requirements (the “scope of work”) are different. According to professional standards
