Question 1

What is an appraisal?

Accepted Answer

As defined by USPAP (Uniform Standards of Professional Appraisal Practice), an appraisal is the act or process of developing an opinion of value. Licensed appraisers must comply with USPAP standards when performing an appraisal. An appraisal can be provided in written or oral form.

Question 2

When do I need an appraisal?

Accepted Answer

Appraisals are commonly requested for financing purposes, pre-listing valuations, tax assessments, insurance valuations, internal asset management, and estate planning, among other reasons. Essentially, anytime a market participant needs to know the value of a property, an appraisal may be requested.

Question 3

Who is the client of an appraisal report?

Accepted Answer

The client is the party or parties who engaged the appraiser to perform the appraisal. In some cases, this may not be the same person who pays for the appraisal. For example, a lender may engage the appraiser, making the lender the client, while the borrower pays for the appraisal. The appraiser has a fiduciary responsibility and confidentiality agreement with the client, not the payee, who may not always be the client.

Question 4

What is the difference between a commercial and a residential appraisal?

Accepted Answer

Residential appraisals are conducted for single-family homes, condominium units, and 2-4 unit residential properties (small income properties). Commercial appraisals, however, apply to properties such as large multi-family buildings, retail spaces, office buildings, industrial properties, and developments like condominium projects or residential subdivisons for developers/homebuilders.

Question 5

Does the appraiser have to inspect the property?

Accepted Answer

Property inspection is not mandatory by regulation but is typically agreed upon and coordinated with the client. If a client prefers not to have the property inspected, a drive-by (exterior-only) inspection or a desktop appraisal (no inspection) can be performed.

Question 6

What types of values can an appraiser provide?

Accepted Answer

Appraisers can provide a range of value opinions, including "as is" market value, retrospective value (a value as of a past date), prospective value (a future date), insurable value, bulk value, and hypothetical value. Additionally, appraisers can conduct market surveys and market rent studies depending on the client's needs.

Question 7

I paid for an appraisal. Can I request a copy?

Accepted Answer

It depends. If the person or entity who paid for the appraisal is also the client, they have the right to receive a copy. However, if the person who paid is not the client, a copy cannot be provided as it would violate the confidentiality agreement with the client.

Question 8

If I’m not the owner, can I request an appraisal of a specific property?

Accepted Answer

Yes, you can request an appraisal even if you are not the owner. In such cases, a desktop or drive-by appraisal is typically performed.

Question 9

Can I request an appraisal if I’m the tenant?

Accepted Answer

Yes, as a tenant, you can request an appraisal of the property you are leasing. In such cases, the appraisal may focus on the leased fee interest or the tenant’s interest, depending on the purpose of the appraisal. Desktop or drive-by appraisals are also possible depending on the specifics of the request.

Question 10

What is the difference between fee simple and leased fee interest in a property?

Accepted Answer

In summary, the fee simple interest refers to the complete ownership of a property, including both the land and any improvements, with the owner having full control and rights over the property, subject to government laws and regulations. Leased fee interest, on the other hand, refers to the ownership of the land and improvements where the property is subject to a lease. The owner of the leased fee interest receives rent from the tenant and retains rights to the property, but these rights are governed by the terms of the lease. For the leased fee interest to apply in an assignment, the lease typically needs to be an arm's length transaction, meaning the tenant and property owner are not related, and the rent was not influenced by any factors. Additionally, the lease generally needs to have a term of one year or more.

Question 11

Can an appraisal be done for a property that is under construction?

Accepted Answer

Yes, in these cases, appraisers can provide an "as is" market value and a propspective market value upon completion. Appraisers can also value a property before construction begins.

Question 12

If I receive an appraisal and notice that a relevant sale was not included, can I request it to be added?

Accepted Answer

Yes, you can request the appraiser to consider specific data or sales. However, the appraiser will use their professional judgment to determine whether the data or sale is relevant to the specific appraisal.

Question 13

Can an appraiser value only the improvements without considering the land?

Accepted Answer

Yes, an appraiser can assign a value to specific segments of the property, such as valuing only the improvements (buildings) without considering the land.

Question 14

Do wetlands affect property value?

Accepted Answer

Generally, wetlands can negatively impact the overall property value because they cannot be developed. However, in some scenarios, wetlands may serve as buffer zones or provide additional density, which could benefit the owner. In Florida, mitigation options are available for wetlands.

Question 15

What is USPAP?

Accepted Answer

USPAP stands for Uniform Standards of Professional Appraisal Practice. It is a set of standards that establishes requirements for appraisers in the United States to promote public trust in appraisal practices. USPAP is adopted by the Appraisal Standards Board of the Appraisal Foundation and is enforced by states, territories, and the District of Columbia.

Question 16

What is a hypothetical condition in an appraisal?

Accepted Answer

A hypothetical condition is a condition that is contrary to what is known to be true on the effective date of the appraisal but is used for the purpose of analysis. Appraisers may use hypothetical conditions for legal reasons, reasonable analysis, or comparison purposes.

Bluemark Valuation Advisors

Real Estate Appraisal Solutions

Frequently Asked Questions