If you’re planning to buy or sell a home, you need to know how to choose an appraiser. This is an important part of the process with pretty much all real estate transactions.

One of the usual essential contingencies to secure mortgage lending at closing is an appraisal contingency. This clause allows homebuyers to back out of their contract if a home is appraised for less than the purchase price included in the contract. But even if this contingency is waived, an independent, unbiased assessment of how much your property is worth can be useful to get a better sense of the market value of your home pre-listing, or for refinancing or securing a home equity loan.

But how do you choose an appraiser?

The important questions are about education and licensing, relevant experience, and appraisal methodology.

Education and Licensing

Federal law mandates certification for real estate appraisers in most states. There are two types of licenses: The Certified Residential Real Property Appraiser and Certified General Real Property Appraiser licenses. Appraisers also need an associate’s degree and commercial appraisers usually need a bachelor’s degree.

Experience

Just like other jobs, you can choose an appraiser based on their resume and references. Much of this information may be on the appraiser’s website. Ask for references from either current or previous clients, but remember that at least one should be from a relatively nearby community. Follow up and don’t be afraid to call and ask about your potential appraiser! Former clients will be able to share with you any concerns they may have, and tell you if your appraiser met their needs.

Depending on your appraisal needs, you may also need to make sure the person you are working with is not a loan officer but an actual appraiser. This is important because loan officers usually have different requirements than individual homeowners — they are specifically looking to assess the condition of the house and place on it a rough market value so they can complete mortgage documents. If you are appraising your home for other reasons, you as a a homeowner may have questions about the appraisal process itself that a loan officer cannot answer. Nor can the loan officer offer suggestions on how to improve your home’s valuation.

Knowledge

Local

You’ll want to choose an appraiser that is familiarized with your area including recent home sales and prices in your area, and that has a strong understanding of local needs and values, including community issues like rezoning and redevelopment. 

Property Type

You’ll want to choose an appraiser that has specific experience with your property type. For example, if you are looking for an appraisal on a suburban single family home, an evaluator that usually consults on multiunit investment properties or downtown condominiums would not be the best fit. Look for candidates with expertise in your kind of property.

Methodology

Appraisers normally use proprietary databases of recent sales and price trends to compile their valuations. This data may be complemented with information from the Multiple Listing Service, a service real estate agents use to list and search for properties.

An independent appraisal should be an unbiased opinion — rooted in data — that sets the value for your real estate property, based solely on the condition of your home and the comparative rates of other real estate properties in the vicinity. So when you choose an appraiser, that appraiser should be able to explain how they arrived at their valuation. 

Conflicts of Interest

In addition to all of the education, experience, licensing, and knowledge factors, you’ll also want to be sure to eliminate potential conflicts of interest when you choose an appraiser. Choosing an individual with no vested interest in the property to be appraised ensures an accurate valuation.

Set advance payment terms based on a per item basis — not on a percentage of appraised value — also to secure an accurate valuation. Fees based on a percentage of the appraised value could encourage price inflation. And fees based on an hourly rate are also suspect and should be avoided. 

Lastly, choose an appraiser that not only has knowledge and experience of home valuation, but that specializes in it. Generalists, or those who claim to have expertise in many areas — like valuing art, antiques, and jewelry in addition to properties — are not as likely to meet your needs.

Whether you are seeking an appraisal to fulfill a mortgage contingency or need to know the comparable value of your property to suggest a listing price, refinance, secure a home equity loan, or any other reason, choosing your appraiser is an important first step. 

List With Elizabeth would be happy to suggest a professional from our experience working with appraisers in the neighborhoods of Northern Virginia.