Frequently Asked Questions
1. What is a qualified appraisal?
A qualified appraisal is created by someone who has formal education in appraisal theory, principles, procedures, ethics and law. The appraiser should be up to date on the latest appraisal standards. Continuing education and testing are the only ways to ensure this competence. The appraiser you hire should also be familiar with the type of property you want appraised and know how to value it correctly. Your appraiser needs to be qualified in both product knowledge and appraisal theory. Ask for a professional profile which lists the appraiser’s education and experience.
2. What do the designations AM and CAPP mean?
These designations are awarded by a professional association to members who have achieved a certain level of experience and education (including the passing of tests). The AM designation refers to Accredited members. This level shows that the appraiser has passed the basic levels of coursework and passed the relevant tests. The CAPP designation refers to Certified members. This level shows that the appraiser has passed both basic and advanced levels of coursework and passed the relevant tests. The CAPP designation is the highest level of designation available.
3. What are the differences between an appraisal and an estimate of value?
An appraisal is a written report including a cover document explaining what type of value is being sought (purpose) and how the appraisal is to be used (function), a description of the markets explored and their state, a complete listing of items with descriptions, the date and location of the inspection, the effective date of the report, the appraiser’s qualifications and the appraisers signature. A statement by the appraiser that he or she has no financial interest in the property or that such interest is disclosed in the report. Some appraisals include photographs or other additional information.
An estimate of value may be written or verbal but does not involve extensive research of the market or many of the other elements of the written report. This type of report is an educated guess and should only be used for personal information and is not adequate for legal, insurance related or IRS related purposes.
4. What is the function of an appraisal?
The function of an appraisal refers to the reason the appraisal is being performed. Examples include valuing belongings to obtain insurance coverage, determining equitable distribution and casualty loss among other reasons. The function is determined by the client.
5. What is the purpose of an appraisal?
The purpose of an appraisal is the value being sought. Examples might be retail replacement value or fair market value. The purpose is determined by the appraiser and is based on the function of the appraisal.
6. What does the client need to do to prepare for an appraisal?
Here are my favorite tips to share with my clients:
- Discuss the value needed with your attorney, accountant or insurance agent if the report is intended for their use.
- Make a list of items to be appraised before the appraiser arrives.
- Remove extra items from the surface or area around the items to be appraised to make it easier for the appraiser to get a close look. Make sure there is an adequate light source for proper inspection.
- Provide any additional information you have about items such as receipts, old appraisals or documents which provide provenance.
Following these tips will allow the inspection and valuation processes to proceed quickly and ultimately save the client money.
7. How do you handle items that may be outside your specialty area?
No one person can know about all areas of specialty. Every appraiser should know his or her limits. A good appraiser has associates in other areas of expertise that can be called upon when necessary to assist in report completion.