Guide to Hiring the Right Appraiser

Step 1: Compile Property Information

Before searching for an appraiser, you should compile as much property information as you can that you think is relevant to valuing your property. Having this information up front helps make sure something unexpected will not be discovered down the line by the appraiser resulting in a revision of the appraisal fee or the delivery date.

For most properties, the following information is essential:

• Assessor’s Parcel Number(s)

• Property Address

• Property Type

• Effective Date of Value

• Ownership Interest

• Intended Use

• Name of Client

• Intended User(s)

For properties with one or more leased units, you will want to be ready to provide the following information:

• Number of units

• Unit mix

• Number of units occupied

• Any expected changes in occupancy, income, or expenses

The following list are documents you will want to have ready, if applicable to your property. You do not need to provide them to an appraiser prior to engaging their service, but having them ready will help ensure there are no unexpected delays in delivery of the appraisal. It will also be helpful to let the appraiser know you will make these documents available upon engagement.

• Financial statements for previous years and YTD

• Leases

• Purchase agreement for any pending sale

• Building floor plans

Last, here are some less common items that should be disclosed to the appraiser prior to engagement. It is impossible to list every potential valuation issue that is out there, but here are some of the more common “uncommon” items:

• Is there a billboard, cell tower, or any other income generated at the property other than rent from tenants?

• Is there a land lease?

• Are there any easements that impact potential usability of the site?

• Is there known site contamination?

• Are there any recent changes in laws that affect the property (ex: the City expected to enact rent control)?

• Do any tenants have purchase options?

Step 2: Determine which Type of Appraiser You Need

Now that you have your property information compiled, you can determine the type of appraiser you need. Licensed appraisers fall into one of several classifications: Trainee, Licensed Residential Appraiser, Certified Residential Appraiser, and Certified General Appraiser.

Trainee Appraisers are allowed to perform property appraisals, complete market and property research, and write reports under the guidance of a certified supervisory appraiser. You should not be engaging appraisal work directly with a Trainee Appraiser.

Licensed Residential Appraisers are qualified to appraise non-complex one to four unit properties having a transaction level less than $1,000,000 and complex one to four unit residential properties having a transaction value less than $250,000. This classification does not include the appraisal of subdivisions.

Certified Residential Appraisers are qualified to appraise one to four unit residential properties without any regard to value or complexity, though this does not include appraising subdivisions.

Certified General Appraisers hold the highest appraiser license level. Those with their Certified General Appraiser license can appraise any type of real property. Aaron Soave, MAI holds a Certified General Real Estate Appraisal license (see details here).

Step 3: Compile a List of Potential Appraisers

The first source I recommend for finding an appraiser is the Appraisal Institute’s free Find an Appraiser tool. It allows you to search by location, property type, and other filters. The results are limited to only Designated Members of the Appraisal Institute, Candidates for Designation, or Practicing Affiliates. Designated Members of the Appraisal Institute hold the MAI designation and have completed education and training far in excess of that required to obtain even the Certified General Appraiser license. Aaron Soave, MAI holds the MAI designation from the Appraisal Institute.

Another option is to use your preferred search engine. In this case, you will find the appraiser or appraisal company that paid to appear at the top of the search results.

Step 4: Interview Potential Appraisers

You will want to interview potential appraisers until you find a good fit. Once you have described the property to the appraiser, here are my suggested questions to ask:

• How much experience does the appraiser have with your property type?

• How much experience does the appraiser have working with similar clients?

• When was the last time the appraiser completed an appraisal in your property’s market?

• What will the appraisers role be in the appraisal process? (Will the appraiser complete the assignment, or assign it to an employee?)

• Will the appraiser complete the market research or assign it to a trainee or assistant?

• How long does the appraiser estimate it will take to complete the appraisal?

• What other information does the appraiser need from you?

• What is the appraiser’s estimated fee?

Step 5: Select An Appraiser

The last step is to select an appraiser. By this point hopefully you have found someone that stands out from the crowd. If you select the right appraiser, he or she should guide you through the rest of the process.

Here are some final tips:

• Do not always go for the lowest fee. I will never forget a conversation I had with someone a few years back. After quoting him a fee for an assignment, he responded with, “The last appraiser quoted me $1,000 less!” I asked why he did not hire that appraiser, and he responded, “I did hire him, but he took my money and I never saw him again!”

• It was said earlier, but I want to remind you to disclose as much as you can to the appraiser. If you wait until the appraiser discovers a surprise, it is likely going to cost you both more time and money than if you had disclosed it up front.

• Similarly, confirm details like date of value, property interest, parcel numbers, addresses, etc. Ask your lawyer or financial advisor exactly what you need. I have had numerous instances where I have had to reappraise a property because (against my recommendation) parties moved forward with appraisals where they guessed at what they needed, and they later found out they were wrong.