Resources for Consumers

What is an Appraisal?

An Appraisal is the process of estimating value based upon facts or assumptions that are applied using the Uniform Standards of Professional Practice. An appraisal provides an answer to a client’s specific question about the (past, present, or future) value or partial value of real estate.

Appraisals are supposed to provide an unbiased opinion on a property’s quality, condition, along with an adequately supported estimate of Market Value. This opinion is provided via written report, commonly called an appraisal.

Despite general beliefs, an appraisal is more than a simple opinion of value, it is a value estimation based on facts.

Appraisals, unless otherwise noted, are not building inspections and do not report on the complete operation or quality of a building. If a buyer needs a building inspection they should seek the counsel of a qualified building inspector (private or public).

Ownership of Appraisals:

Typically, an appraisal is owned by the person who pays for the appraisal, similar to publication rights of a book. When a lender orders an appraisal, the Appraiser is usually paid by the lender and works on behalf of the lender (not the borrower). Therefore, the lender owns the appraisal and all published rights. The Appraiser does not exist to protect the buyer or borrower, the Appraiser is a disinterested third party.

When a private party orders an appraisal, the person who orders, pays for, and whose name appears on the appraisal as the client, owns the appraisal and is entitled to copies.


According to The Dictionary of Real Estate Appraisal, 5th Edition, 2010

The definition of an Appraisal is:

1. The act or process of developing an opinion

2. An opinion of value

The definition of a Valuation Process is:

A systematic procedure used in the valuation of real property.

The Appraiser’s Role?

An Appraiser is an independent third party that provides an unbiased opinion on a property’s quality, condition, and market value. His or Her opinion is provided via written report, commonly called an appraisal. Whenever there is a question of a property’s value (past, present, or future) you need an appraisal.

Appraisers estimate value based upon facts that are applied using written standards and methods (Uniform Standards of Professional Practice). The appraiser makes a cursory inspection similar to the inspection a buyer would make prior to creating an earnest money agreement. Appraisers are not home or building inspectors.

Below is the typical “Scope” of an appraisers assignment. However, this can be altered by mutual agreement.

  1. The scope of this appraisal assignment includes the Appraiser performing a superficial interior and exterior examination, of the subject property, similar to the examination a potential purchaser would perform before submitting a purchase offer on Real Estate. This viewing was to gather basic information used in comparing the subject against other properties. This viewing did not examine the structural integrity or the correct operation of plumbing, sewer, electrical or heating systems, or other items. When the form indicated that a surface or component was in “Average” condition – this refers to the exterior of the item. On the surface that component appears to be in average condition and properly working. “Average Condition” did not refer to the correct operation or internal integrity of that item.
  2. Due to the limited extent of this inspection it was assumed that all hidden components (including but not limited to, framing, foundation, insulation, roofing, together with electrical, plumbing and HVAC systems) exist, are in working order, and were built to community standards typical of the era when the improvements were built or last updated. We do not know if building permits were obtained or what building codes were in effect at the time of the improvement’s construction or modification. No verification of building or land use permits was performed. Typically, crawl spaces and attics are not entered or viewed. This appraisal does not serve as warranty on the complete condition of the property.
  3. The Appraiser assumes the borrower or his/her agent, has made all the examinations necessary to satisfy themselves about the condition, hidden or otherwise, of the subject property.
  4. In this appraisal assignment, the existence of potentially hazardous material used in the construction or maintenance of the building/property, such as the presence of urea-formaldehyde foam insulation, and/or the existence of toxic waste, which may or may not be present on the property, was not knowingly observed by me {us}; nor do I {we} have any knowledge of the existence of such materials on or in the property. The Appraiser, however, was not qualified to detect such substances. The existence of urea-formaldehyde foam insulation or other potentially hazardous waste material may have an effect on the value of the property. I {we} urge the client to retain an expert in this field if desired.