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Introduction To Appraising Real Estate

This is normally the first appraisal course that most people take if they are interested in becoming a licensed real estate appraiser. I will use my own notes from when I took the appraisal classes, along with my own comments and experience as a guideline for some of the following sections. The important items will be highlighted that I'm aware of from my experience as an appraiser and in the real estate business. I will try to keep these sections in a flowing format by including some additional comments and appraisal war stories. This will help explain anything that is new to you.

These courses have been renamed by State appraisal organizations to coincide with the Federal regulations of The Appraisal Foundation. Two of the class instructors that I had were some of the best teachers I've ever had. They were Anthony Fasanella and Dr. David Scribner. If you ever get a chance to take a class they're teaching, I suggest you do it (if they're not already retired). It'll be well worth your time and money. They are both true professionals with integrity and a sincere interest in improving the quality of real estate appraisers and the appraisal profession overall.

There are going to be appraisal math calculations in some of the following sections. If you're serious about real estate appraising then you're going to need to know this stuff. I hate math maybe as much as you do, so I'll keep it as simple as possible. I'm no rocket scientist myself, so if I can do the math then you certainly can too! I will round out the numbers when there are more than two decimal places. So please don't get angry if the answers you get on your calculator have more than two decimal points or if they don't appear to exactly match the numbers in the book.

Some readers of this book, such as home buyers or sellers, may not be interested in becoming licensed real estate appraisers. They may only be interested in getting a general working knowledge of appraisal concepts. For those readers, I would recommend you don't get too caught up in trying to memorize the in-depth math and appraisal concepts discussed in some sections of this book. Choose the sections you feel are most useful to you for now, and then you can learn the more in-depth topics later if needed.

Some readers of this book, such as home buyers or sellers, may not be interested in becoming licensed real estate appraisers. They may only be interested in getting a general working knowledge of appraisal concepts. For those readers, I would recommend you don't get too caught up in trying to memorize the in-depth math and appraisal concepts discussed in some sections of this book. Choose the sections you feel are most useful to you for now, and then you can learn the more in-depth topics later if needed.

Real Estate Advice Education House Inspection Appraisal Home Improvement RenovationReal Estate Expert Investing Advice FSBO Homeowners House Buyers Sellers Realtors Agents Brokers   I will repeat the definition of market value since it is such a critically important and integral part of every appraisal that you cannot ever forget when working on your reports! (That's why I used both icon key symbols).

  • Definition of Market Value - The definition of market value that applies to HUD/FHA is cited from the Uniform Standards of Professional Appraisal Practice. (HUD is the U.S. Department of Housing and Urban Development. FHA is the Federal Housing Administration). This is the definition of value which must be used for all appraisals performed for FHA-insured mortgages:
  • "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and 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. The buyer and seller are typically motivated.

  2. Both parties are well informed or well advised, and each is acting in what they consider their best interest.

  3. A reasonable time is allowed for exposure in the open market.

  4. Payment is made in terms of cash in United States Dollars or in terms of a financial arrangement comparable thereto.

  5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions.

You also need to review section HUD and FHA Guidelines and section Real Estate Appraiser Guidelines for more details and rules about appraisal standards and how to fill out the standard appraisal report forms.

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