If you are buying, selling, or refinancing your home and a financial institution is involved, you will need an appraisal of your property. An appraisal determines the estimated market value of your home. This is then used to determine whether the property is sufficient collateral for a loan.
Why do I need a property appraisal and how does it work?
An appraisal is essentially a written estimate of a home or property’s value based on current market conditions. This estimate is determined by a licensed appraiser and is delivered in an official appraisal report. In most cases, the appraisal is requested by the buyer’s lender because the lender is looking for assurance that the property is sufficient collateral and worth the amount that the borrower has agreed to pay. You can review the Appraisal Foundation’s Guide to Understanding a Residential Appraisal for more information about how the appraisal relates to the mortgage lending process.
Do I need to find my own appraiser?
In most situations, the mortgage lender will select the appraiser to do the assessment of a property. However you’re welcome to look up the appraiser assigned to your property to check into their credentials. The Appraisal Subcommittee maintains the National Registry of appraisers. Here you can search for appraisers by state, city, county, by name, or by license number. You can also find qualified appraisers in your area by visiting the websites of the many appraiser professional trade associations.
Appraiser license types
A professional appraiser provides an impartial and an objective valuation of a property. TALCB exists to protect consumers’ interests as well as to ensure appraisers comply with the Uniform Standards Professional Appraiser Practice (USPAP) in their appraisal assignments.
In Texas, recognized appraiser classifications include:
An Appraiser Trainee is a person who is working towards becoming a licensed appraiser. They are gaining legal real estate appraisal experience under the sponsorship of a Certified General or Certified Residential Real Estate Appraiser. An appraiser trainee may be assigned to your real estate appraisal but they are working under the direction and supervision of their sponsor
Licensed Residential Appraiser
A Licensed Residential Appraiser is a person who is authorized for the appraisal of non-complex residential 1-4 unit properties with a transactional value less than $1,000,000. This also means they have the authority to complete complex federally related transactions (FRT) and non FRT transactions with a value less than $250,000
Certified Residential Appraiser
A Certified Residential Appraiser is an individual that is certified to perform residential real property appraisals. A Certified Residential Appraiser is authorized for the appraisal of 1-4 unit residential properties regardless of the transaction value or complexity of the appraisal
Certified General Appraiser
A Certified General Appraiser is a person authorized to appraise all types of real property without regard to complexity or transaction value for federally related transactions and non-federally related transactions
Customary appraisal fees
Appraisal fees will vary based on the size and location of the property, and the complexity or purpose of the appraisal. If you hire an appraiser directly, the fees are determined by the appraiser. For an appraisal connected to a mortgage loan, the lender sets the amount a borrower must pay for the appraisal. A lender will often collect additional appraisal management fees over what the appraiser will receive. According to a 2014 Texas appraisal fee survey, appraisers reported that they received between $300 and $450 for each mortgage-related appraisal of a typical single family home.
For unusual or rural properties, or in areas where there are fewer appraisers, fees will usually be higher. Similarly, for a multi-unit residential or other investment property where the lender requires an analysis of income and expenses, appraisal fees will be much more expensive than for a single family home.
How does the appraisal process work?
In most situations the financial organization involved in buying, selling, or refinancing the home selects and hires the appraiser. In most cases, the appraisal process looks like this:
- The party that owns the loan is generally responsible for paying for the appraisal services during the closing process
- The appraisers arrives at the property location and begins the evaluation; this can take several hours
- On site, the professional appraiser evaluates the property in terms of location, size, amenities, and property condition
- This information is used to determine their opinion of the estimated value
Who is my appraiser?
Although the financial or lending institution generally selects and assigns an appraiser to your property, you may still want to review licensed appraisers in your area. TALCB has an extensive License Holder Search tool that will help you look up the appraiser assigned to your property. Additionally, the Appraisal Subcommittee, managed by the Federal Financial Institutions Examinations Council, manages the registry of licensed appraisers. The registry is a database consisting of state licensed residential, state certified residential and state certified general appraisers who are eligible to perform appraisals. Within the National Registry of appraisers you can:
- Investigate an individual’s experience and credentials
- Determine if there are any problems or pending investigations with an individual’s work
- Search for appraisers by state, city, county, by name, or by license number