According to the latest data from the Bureau of Labor Statistics, the mean annual wage for real estate appraisers is $57,000. This speaks to the importance of the property appraisal, a process necessary to most real estate transactions, taxation assessments, and building approvals. The role of the appraiser is to explore the property systematically, analyzing data from both the home and the surrounding elements to come up with a fair and reasonable assessment of value. While an enormous number of factors play into the final assessment, the following are the most important keys to effective appraisal.
Physical Features
According to some sources, even minor sinkhole damage can knock as much as 30% off a home’s market value. This gives some indication as to how important a home’s physical features are to its assessment. Insect infestation, age, square footage, disrepair, and the overall quality of the construction will all play a part in determining the value of a home. Generally speaking, homes in need of significant repair or upgrades will be valued lower than homes that are in better condition. Permanent fixtures like large appliances, plumbing, and carpets will also be taken into consideration by the appraiser.
The Real Estate Market
Homes aren’t bought and sold in a vacuum. It’s important for a property appraiser to take the overall market into consideration when providing valuation services. Factors such as interest rates, demographics, the economy, and the presence of government subsidies all play a role in determining the health of the market. Appraisers must factor in these extra-property factors into their work if they want to get as close to true value as possible. It is for this reason that a low property appraisal is sometimes regarded as being a good investment indicator.
Location
If there’s an element of property appraisal every bit as important as the physical characteristics of the home, it is that home’s location. A property appraiser will often include a comparative market analysis (CMA) in their report. The CMA uses the sale price of similar homes in the area to help the appraiser come up with a fair price for the property in question. Active, pending, and sold listings will all play a part in determining a fair value. Other factors to consider will include the safety of the neighborhood, schools in the area, and the presence or lack of economic opportunities.
Becoming a Property Appraiser
There are so many elements of property appraisal that require a fundamental knowledge of finance and other business concepts. Specialized courses and on-the-job training pave the way for appraiser certification, but most qualified applicants start with a bachelor’s degree. The University of Alabama at Birmingham offers excellent online business degree programs that can put you on the road to a career in real estate appraisal. Visit businessdegrees.uab.edu to find out more about these exciting opportunities.