Frequently Asked Questions


The Importance of a Professional Real Estate Appraisal


Because much private, corporate, and public wealth lies in real estate, the determination of its value is essential to the economic well-being of society. It is the job of the professional appraiser to determine these values by gathering, analyzing, and applying information pertinent to a property.


Unquestionably, the professional opinion of the appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of the real estate. Because the appraiser is trained to be an impartial third party in the lending process, this professional serves as a vital "check in the system," protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.


Appraiser Qualifications


Many states require all real estate appraisers to be, at a minimum, state-licensed or state-certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation. For more information click here.

How long does an appraisal take?


The physical inspection of the real property being appraised can take approximately thirty minutes to several hours, depending upon the size and complexity of the subject and site.

After the initial inspection of the property, a search for sales similar to the subject, rental or lease income, and cost information is conducted using a variety of data sources.  Each approach to value (Market, Income, Cost) is analyzed in each appraisal unless otherwise indicated.  A report with the appraiser's conclusion is prepared either on an appraisal form of 10-15 pages or a narrative format that can exceed 100 pages.  A short-form report usually takes between six to ten hours to complete. A narrative report can take weeks or sometimes even months, depending upon the complexity of the assignment.

Appraisal VS. Engineer or Whole House Inspection?


The appraiser is not a whole house inspector, engineer, architect, electrician, plumber, H.V.A.C. technician, or contractor. The appraiser walks through the property to get an idea of the general condition and layout. An appraisal is not a guarantee of condition. The appraiser will ask about any visible problems and those which may not be visible and will do his/her best to gauge any impact on value attributable to those problems. You are encouraged to seek the advice of experts if you have any questions about the structural or mechanical aspects.

Appraisal Reporting Options


There are two types of appraisals, and three types of reports.  The appraisal types are complete and limited.  A complete appraisal considers each of the three approaches to value (Market, Income, and Cost).  One or more of the approaches may not be used if they are not deemed to be applicable (i.e., Income Approach in a predominately owner-occupied residential neighborhood), but each approach will be given consideration in the appraisal process.  A limited appraisal specifically chooses not to consider one or more of the three approaches to value.  This is at the direction of the client to meet their needs.  A limited appraisal cannot be performed by an appraiser when the appraiser deems that the approach(es) not considered would lead to a misleading conclusion or value. 


The three types of reports are complete, summary, and limited.  A complete report is the “soup to nuts” approach, including all relevant material considered in the appraisal process.  This reporting style is most often used in complex commercial or industrial properties, properties over a lending amount as required by a banker, or special uses such as litigation or estate use.  A summary report is the most common type of report.  This includes most residential appraisals performed, including for mortgage purposes (buying or refinancing a home through a lender).  A limited report is used to outline a brief recap of the appraisal process to the client.  This is used most often in conjunction with a previous appraisal done for the same property for the same client, a special use appraisal, and one that will not be forwarded to a third party for any use as it may be misleading and/or confusing to the reader. 

Services provided


In our complex society, you may need and use the services of a professional real estate appraiser for a variety of reasons. Depending upon an appraiser's designation and qualifications, he or she can provide some or all of these services: Appraisals - Residential or Commercial; Counseling and Consulting; Evaluations; Expert Witness Testimony; Litigation Preparation; Feasibility Studies; Market Analysis; Market Rent & Trend Studies; Tax Assessment Review and Advice or Zoning Testimony.

Know Your rights in the appraisal process!


Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request. If you are dissatisfied with any information contained in your appraisal report, you should contact your lender immediately.

The following Items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time.


A survey of the house and property; A deed or title report showing the legal description; a recent tax bill; a list of personal property to be sold with the house if applicable; a copy of the original plans & specifications, the date and purchase price you paid when you purchased the property; a list of recent improvements & cost as well as any other information you feel may be pertinent.

The Appraisal Process


The appraisal process is an orderly and concise method of reaching an estimate of value. The process has six major steps which include: definition of the problem, preliminary survey and appraisal plan, data collection and analysis, application of the three approaches to value, reconciliation of value indications, final estimate of defined value. This process assists the appraiser in reaching a sound conclusion.


The major phase of this process involves the application of the three approaches to value which include the Market Data Approach, the Cost Approach, and the Income Approach. The three approaches are reconciled and the value via the most applicable approach, in the opinion of the appraiser, is selected as the final estimate of value. In most residential appraisals, particularly those of single or two-family dwellings, the direct sales comparison or market approach best reflects the actions of buyers and sellers and is the most convincing and defendable approach to value.

The market or direct sales comparison approach to value


The market or direct sales comparison approach to an estimate of value is a process of comparing market data, that is, prices paid for similar properties, prices asked by owners, and offers made by prospective purchasers or tenants willing to buy or lease. Typically, a comparison grid is used and adjustments are made to each of the comparable sales used for major differences between the comparable and the subject property for such items as location, gross living or building area, lot size, condition/effective age, market conditions, degree of remodeling, construction quality and significant amenities, i.e.: fireplace, Jacuzzi, in-ground pool, garage, deck, patio, porch and central air conditioning etc. In the market approach, the appraiser attempts to both gauge and reflect the anticipated reaction by a typical purchaser to the subject property.

Comparable sales


A comparable sale is a property, that is similar to the subject property in most respects, is located in a similar (nearby) location, and has sold recently at arm’s length. The selection of comparable sales is in most residential appraisals, the single most important determining factor in establishing value. It is the appraiser’s responsibility to adequately research the local real estate market and determine which comparable sales best represent the value characteristics of the subject property.

Arm’s length transaction


An arm’s length transaction is one in which both seller and purchaser act completely independently of each other and have no connection or relationship to each other.

Market value


Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

The cost approach to value


The cost approach combines an estimate of land value with an estimate of depreciated reproduction or replacement cost of the improvements. The principle of substitution is the basis of the cost approach, in that no rational person will pay more for a property than the amount for which he can obtain, by the purchase of a site and construction of a building, with undue delay, a property of equal desirability and utility.

The income approach to value


The income approach is based on an estimate of net income from the operation of income-producing property and the selection of the property capitalization rate from market indications of similar properties. The principle of anticipation is the basis of the income approach and affirms that value is created by the expectation of benefits to be derived from possession, operation, and/or capital gain at resale.

Highest & Best Use


Typically, highest & best use means the use or utilization that provides the most profitable return on investment. It is that use, selected from reasonably probable and legal alternative uses, which are found to be physically possible, appropriately supported, and financially feasible to result in the highest possible land value.

Uniform Standards of Professional Appraisal Practice

Appraisal Standards Board (ASB)

The ASB sets forth the rules for developing an appraisal and reporting its results. In addition, it promotes the use, understanding, and enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


FIRREA requires that real estate appraisals used in conjunction with federally-related transactions be performed in accordance with USPAP. More than 80,000 state certified and licensed appraisers are currently required to adhere to USPAP. USPAP contains the recognized standards of practice for real estate, personal property, and business appraisal. The authority of USPAP extends beyond FIRREA. Since 1992, the Office of Management and Budget (OMB) has required federal land acquisition and direct lending agencies to use appraisals in conformance with USPAP.


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Wren Appraisal, L.C.

2010 E 38th Street, Suite 102

Davenport, IA 52807 USA


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