Appraisal Information

Appraisal and Research Information

Tips On Finding and Evaluating Appraisers

provided by

American Society of Appraisers

Are you aware of the impact that appraisers have on your life? For example:

a. Appraisers are involved in the taxes you pay on your home.

b. Appraisers determine the value of property for insurance purposes and supply information to assist in the settlement of damage claims.

c. Appraisers work with banks to determine the advisability of bank loans (for mortgages, improvement loans, etc.).

d. Appraisers are involved in prices paid for homes, businesses, farms and land required for public works projects.

e. Appraisers determine the value of property at the time it is donated to a tax-exempt institution or charity (information used in the preparation of tax returns and in the analysis of these returns by the IRS).

Real estate appraisers involved in any federally related transaction must be state licensed or certified. The only testing/accreditation process available to appraisers of other properties (fine arts, antiques, gems/jewelry, machinery, equipment, businesses, aircraft, yachts, etc.) is membership in a professional, nonprofit appraisal society that demands adherence to ethical principles and procedures. And, in the case of the American Society of Appraisers, all members are required to conform to the Uniform Standards of Professional Appraisal Practice (USPAP) as promulgated by the Appraisal Foundation. The foundation is recognized by the U.S. government as the source for the development of appraisal standards and qualifications.

To help you understand more about the appraisal profession, we present the following information as a public service.

1. What is appraising?

The art and science of estimating the value, at any given time, of any sort of property is called "appraising." Appraising also involves cost estimation and the forecasting of monetary earning power.

2. Are there specialized fields of appraising?

Yes. The six major classifications of appraising recognized by and represented in the American Society of Appraisers are: Appraisal Review and Management; Business Valuation; Gems and Jewelry; Machinery and Technical Specialties (Agricultural Chattels, Aircraft, Arboriculture, Computers and High-Tech Personal Property, Cost Surveys, Industrials, Machinery and Equipment, Marine Survey, Mines and Quarries, Natural Resources, Oil and Gas and Public Utilities); Personal Property (Antiques and Decorative Arts, Fine Arts, Classified Specialties and Residential Contents-General); Real Property (Ad Valorem tax appraising, Residential, Rural, Timber/Timberland and Urban). ASA tests and accredits practitioners in all of these specialties.

3. Where do I find an appraiser?

There are numerous appraisal organizations in the nation; but of the eight major testing/accrediting societies, only the American Society of Appraisers teaches, tests and accredits appraisers in the various disciplines described above. The American Society of Appraisers publishes a directory of accredited appraisers that consumers can use to select an appraiser. In addition, you can use ASA's toll-free telephone number to find an appraiser in your area. The number is (800) ASA-VALU.

You may find appraisers listed in your local Yellow Pages. Some will show designations after their names. Even so, it's important to ask about the appraiser's credentials. We list, for your convenience, on page 6 of this pamphlet, questions for you to ask the appraiser before you sign any contract for services.

4. How can I judge an appraiser's qualifications?

An appraiser's qualifications can be judged by studying and evaluating information from several sources:

a. Documented accomplishments such as the appraiser's personal "qualifications statement" or job-history resume.

b. Professional accreditation by the American Society of Appraisers or another teaching/testing/accrediting organization. The ASA specifically designates appraisers in two categories: Accredited Member (AM) and Accredited Senior Appraiser (ASA). Two years of full-time appraisal experience are required before a Candidate may apply to be tested as an Accredited Member; those who become accredited will use the designation AM after their names. Five years of full-time appraisal experience are required for the Accredited Senior Appraiser designation; those who become accredited will use the designation ASA after their names. Membership in either category requires a college degree, other education and experience, and passing of intensive written and oral examinations covering areas of general value theory, technical expertise and principles and ethics of appraising.

c. Reputation, including recommendations/references by insurance companies, banks and related financial institutions, the Internal Revenue Service, museums, and government bodies at city, state, federal levels, etc., for which the appraiser has performed appraisal services; also recognition received for professional activities.

d. Personal interview, which you should conduct to determine how the appraiser's experience and knowledge or expertise relates to the particular assignment that you are proposing.

5. What ethical considerations are involved in an appraisal?

a. All principles of appraisal ethics stem from the following central fact: the primary goal of a monetary appraisal is the determination of a numerical result that is objective and unrelated to the desires, wishes or needs of the client who engages the appraiser to perform the work.

b. The American Society of Appraisers takes the position that it is unprofessional and unethical for an appraiser to contract to do work for a fixed percentage of the amount of value or of the estimated cost (as the case may be) that he or she determines at the conclusion of the assignment.

c. Further, ASA declares that it is unethical and unprofessional for an appraiser to accept an assignment to appraise a property in which he or she has an interest or a contemplated future interest unless the appraiser has disclosed this interest to the prospective client. If the client still wishes to retain that appraiser, the appraiser may properly accept the assignment provided disclosure of the nature and extent of that interest is contained in the appraisal report.

6. What are the key points for me to understand in an appraisal report?

a. The appraisal should clearly state the kind of value being determined, such as (1) fair market; (2) liquidation; (3) replacement reproduction, etc.

b. It should describe the properties being valued.

c. It should detail the procedures used to estimate the values, such as: (1) analysis of comparable sales; (2) estimation and analysis of income (if applicable); (3) relation of the appraisal values to a specific point in time (e.g., fair market value of the real estate as of January 1, 1996).

d. It should be signed by the individual who made the appraisal and who is responsible for its validity and objectivity (to you and to third parties).

e. It should contain the personal qualifications data of the appraiser.

In summary, it is important for you to remember that the appraisal you are paying for should answer the value questions you have asked in a manner that you can understand and that you can see is objective, descriptive and documented.

7. How long is an appraisal considered "up to date?"

Because of fluctuating market conditions that affect different properties differently, no precise answer can be given to this question. Generally, "updating" an appraisal requires a change only in the value conclusion of a report; no change need be made in the descriptive portions of the report unless, of course, there are additions or deletions involved. Whether an appraisal needs to be updated, then, depends on whether there are changes and whether the value as reported at the time of the appraisal is still pertinent.

Many appraisers recommend an "update" at least every three years, preferably every two. Several decades ago appraisals were considered "current" for at least ten years. Current market conditions have drastically reduced this estimate. A professional appraiser can provide an informed and helpful recommendation as to the necessity and frequency of appraisal "updates."

8. Does the ASA have tested/accredited experts in all types of property?

Yes. ASA is represented by approximately 3,500 tested/accredited appraisal experts in all areas of appraising, including real estate, personal property, machinery and technical specialties, large and small businesses, gems and jewelry and so forth. These representatives are located in all parts of the United States and abroad.

9. What questions should I ask when interviewing an appraiser?

a. What is your general appraisal and educational background?

b. What specific experience do you have with the kind of property I wish to have appraised?

c. Are you a member of a professional appraisal society? Does that society teach, test and accredit?

d. Do you hold a special designation issued by an appraisal society?

e. Is that designation based on successfully completing written examinations?

f. How long ago did you take the examinations?

g. What continuing education have you undertaken to keep up-to-date in the field?

h. Has the appraisal society you belong to adopted a mandatory reaccreditation program to ensure that your education and knowledge are current?

i. What do you charge for your services, and how do you base your fee?

j. Are you required by your appraisal society to adhere to the Uniform Standards of Professional Appraisal Practice?

The appraiser you select should possess relevant experience, education, skill and integrity. The professional practitioner will be pleased to answer the questions listed in this booklet and to place his or her qualifications before you.

In reviewing an appraiser's credentials, remember that an accreditation in appraising issued by a major teaching/testing/accrediting appraisal society is a strong indicator of ability. It is important to note that a major appraisal organization such as the American Society of Appraisers requires strict adherence to its Principles of Appraisal Practice and Code of Ethics and to USPAP.

ASA's Principles of Appraisal Practice and Code of Ethics are closely monitored; all members of ASA are required to conduct their appraisal practice in conformance with the highest ethical and professional criteria defined therein.

Additionally, to ensure that competent, relevant, current valuation counsel is available to the public, ASA requires Accredited Senior Appraisers to reaccredit. This mandatory program emphasizes professional participation in a continuing education process. The program interfaces with the society's Principles of Valuation courses, the Valuation Sciences Degree Programs, and ASA's examination procedures.

For more than half a century, the American Society of Appraisers (ASA) has served the international public as a nonprofit, independent appraisal organization that teaches, tests and accredits appraisers. It is the nation's oldest multidisciplinary appraisal society.

U.S. and International Membership

ASA's members, numbering more than 6,500, are located in the United States, Argentina, Australia, Belgium, Brazil, Canada, the Czech Republic, Ecuador, France, Germany, Guam, Hong Kong, Hungary, India, Indonesia, Ireland, Italy, Jamaica, Japan, Mexico, the Northern Marianas, the Philippines, Portugal, Puerto Rico, Slovenia, South Africa, Spain, Switzerland, Taiwan, Thailand, Uganda, the United Arab Emirates, the United Kingdom, Venezuela and the Virgin Islands.

The Appraisal Foundation

The American Society of Appraisers is one of eight major appraisal societies in the United States that helped found this national nonprofit organization in 1987. Created to establish uniform criteria for professional appraisers, since 1989 the foundation has been recognized by Congress as the source for the development and promulgation of appraisal standards and qualifications. It publishes the Uniform Standards of Professional Appraisal Practice, with which all members of the American Society of Appraisers must comply.

For More Information . . .

Write: American Society of Appraisers

P.O. Box 17265

Washington, DC 20041

Phone: (800) ASA-VALU

(703) 478-2228

Fax: (703) 742-8471

E-mail: asainfo@apo.com

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This page was originally published in 2000 in Resource Library Magazine. Please see Resource Library's Overview section for more information.