5 Things real estate appraisers are NOT

A look at what real estate appraisers are not

real estate appraisers are NOTReal estate appraisers are not the only professionals involved in house sales transactions. When speaking to buyers and sellers they often get confused about exactly real estate appraisers do.

There are various real estate related jobs that people get confused with appraisers so today I’m going to explain the differences between the professionals involved in most real estate transactions.

Real estate appraisers are not home inspectors

Often times when doing an appraisal I will get asked about the condition or operation of a mechanical system in the home. While appraisers do make a visual observation of the home they are not required to formulate an opinion as to the actual condition of the mechanical, electrical, HVAC, and structural systems of the house.

The only exception to this would be if something is readily apparent upon casual observation. An example of this might be hearing unusual noises coming from the furnace when it was on or seeing burn marks on electrical outlets. The appraiser is required to report these items and possibly call for an inspection by a licensed professional.

Many times when an appraiser sees these types of things the appraisal may be made “subject to” an inspection to determine the exact cause of the problem and a cost to fix it. The opinion of value would only be valid if no major problems existed, however if a major problem was present then the appraiser would need to consider the cost to fix it or the effect on marketability of leaving it like it is.

The home inspectors job is to observe the systems in a house and report on their condition. Appraisers like to look at home inspections that have recently been done on the homes they are appraising to take into consideration any noted problems and repairs that need to be made because the condition of the home can have a major impact on the appraiser’s opinion of value.

Real estate appraisers are not title reps

Title companies are typically involved whenever a property is sold. A title policy will involve the research of ownership of the property to insure that there are no encumbrances in ownership. The encumbrances could be things like mechanics liens or previous mortgages on the property.

When performing an appraisal the appraiser assumes that a clean title of ownership exists, however if it does not then the marketability and value of the property is affected. The appraiser cannot and does not guarantee anything related to the title of the property.

Real estate appraisers are not real estate agents

Real estate appraisers are typically not involved in the sale of real estate. There are some appraisers who may holdthings real estate appraisers are not licenses to do both, however if an appraiser is acting as an agent to an owner they cannot also perform a formal appraisal on the same property they are trying to sell.

An appraiser’s job is to act as an unbiased third-party, and the public’s trust can be hurt if they act in both capacities. The agent’s job is to act on behalf of the seller and get as much for their house as possible. If they also acted as an appraiser for this property it might appear that they were trying to appraise the property for as high as they could so the owner/seller would get more money.

As an old appraisal instructor of mine once said, the appraiser/agent must decide which hat they want to wear and only wear one. They must also disclose the fact that they are an appraiser but may not be acting in that capacity.

It’s important for the public to know that the job of an appraiser is to provide a market supported opinion of value while the agent’s job is to help sell the property.

Real estate appraisers are not surveyors

Another job than owners get confused with that of an appraiser includes the land surveyor. The land surveyors job as it relates to residential real estate consists of determining the correct boundaries and legal description of a property.

Appraisers are required to include a correct legal description of the property as well as include the size and or dimensions of the property being appraised. Since this is not the job of an appraiser it is important to obtain an accurate survey on the property to get this information.

I have performed numerous appraisals over the years where the owner was misinformed about the exact size of the land or lot their home was built on. The homeowner should not be under the misperception that this is the fault of the appraiser since that is not their job but rather seek out the services of a surveyor to get the correct information.

Real estate appraisers are not tax assessors

This may be a little confusing since county tax assessors are technically appraising your property in order to assess it for the correct amount. What I mean here is that independent fee appraisers, the kind that provide mortgage appraisals, pre listing appraisals, divorce appraisals and other such appraisals are not the same ones that value your home for tax assessment.

Independent fee appraisers work for individuals, banks, investors, and real estate agents to provide market value appraisals. They do not provide this information to the county tax assessor which is something I am asked quiet a bit.

Homeowners are sometimes worried that if my opinion of value in an appraisal report is higher than what the county has their home assessed at then the property taxes can increase. In reality we do not provide any information to the county and the appraisal report, including everything included in it, is the property of the party that ordered it and cannot be given to anyone else without approval.

Question

Are there any other questions you have about what real estate appraiser are not? If so please leave a comment below and I’ll do my best to answer them for you. If you have anything else to add lets continue the conversation and leave a comment below. Thanks again for reading.

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Comments

  1. Braden Bills says

    It makes sense that you would want to make sure that you are hiring a real estate appraiser for the right reason. You wouldn’t want to hire one to inspect a home only to realize that it isn’t what they do! It’s important to understand that they just determine the value of a home.

    • Exactly Braden. I get calls all the time from people that think I do home inspections so I thought it might be helpful to explain what we do and do not do. Thanks for your thoughts.

  2. Mike Robertson says

    Nice post Tom. I like the contrast between appraiser and agent. Appraisers are also not prognosticators. The effective date doesn’t live on into the future.

    • Thanks Mike, and you’re right. I tell people when they ask me how long the appraisal is good for I tell them until I leave the property. A fire or tornado could destroy the home and then the appraisal doesn’t even matter. All kidding aside, any additional relevant market activity (ie sales) occurring in the near future can have an affect on the property being appraised.

  3. Nice post-Tom. I have found that appraisers are confused for many things.
    Thanks for providing some clarification!

    • Thanks Shannon. I agree about us being confused with other real estate professionals. That is why I thought it would be helpful to simply explain some of the players involved so buyers and sellers would better understand each of our roles.

  4. Great list Tom, Ryan got in the Contractor in the idea before I could. Appraisers are not experts in everything, so when we don’t know we have two options. We can either make an assumption or get an expert’s opinion.

    • Thanks Gary. I find that many people are just confused as to everything appraisers do. I myself would rather get the opinion of an expert rather than make assumptions. You know what they say about assuming…

  5. I would also say appraisers are not structural engineers or general contractors. If someone wants to verify if something has structural integrity or was built in a professional workmanlike manner, the appraiser is probably not the best person to make that in call.

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