In almost all cases, when you buy a home with a mortgage, the lender will require an appraisal of the property by a licensed real estate appraiser.
Appraisers, like real estate brokers and agents, are licensed by the state of Arizona, must meet certain qualifications and are required to take continuing education to keep up with current regulations.
In addition, appraisers must follow federal guidelines when performing appraisals for certain government guaranteed loans.
An appraiser’s job is to report an opinion of value on a specific type of property.
There are three types of appraiser licensing:
• Licensed residential appraisers appraise non-complex residential properties with values less than $1,000,000;
• Certified residential appraisers appraise property of any value including those with FHA financing;
• Certified general appraisers appraise any type of real estate.
Appraisers face stringent education requirements.
Residential appraisers must complete 150 hours of education and 2,000 hours of experience under a certified appraiser.
Certified residential appraisers have an associate’s degree and 2,500 hours of experience.
Certified general appraisers have a bachelor’s degree and 3,000 hours of experience with 1,500 hours in a non-residential field.
Just like real estate brokers and agents, appraisers are required to work within their area of expertise.
A quote from the competency rule states, “Competency applies to factors such as, but not limited to, an appraiser’s familiarity with a specific type of property, market, a geographic area, or an analytical method.”
Therefore, an appraiser from Yuma may not be qualified to do appraisals in Payson because they are not familiar with the geographic area.
Mike Foil, a local appraiser, recently gave a presentation to our office staff.
Afterward, it gave us an appreciation of the nuances and challenges of his profession.
Foil said that in our market we are still experiencing declines in our housing values and these must be factored in to the analytical process.
Another challenge, because of the slower housing market, is finding timely comparable sales.
This is particularly hard in the higher end properties as the velocity of sales has been slow.
Many Internet sites attempt to give the value of a home by inputting the home’s address, however, experience has shown that these “valuations” are a best guess.
They probably have better success in “cookie cutter” neighborhoods, but are unreliable in areas such as Payson where there is a great diversity in housing.
They are no substitute for a broker’s market analysis or an appraisal.
Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.