The New York Appraisal Mgmt. Co.             

Frequently Asked Questions

1. What is an appraisal?

A real estate appraisal is an unbiased opinion of value resulting from the proper employment of the correct valuation techniques.

Simply put, an appraisal is a opinion of value completed by a disinterested third party. The value is most often defined as being the most probable price (in terms of US dollars) that a real property would sell for in the local market.

2. Who needs an appraisal and why?

An appraisal is necessary whenever a property is used as collateral per a loan agreement (i.e. home purchase, refinancing, home equity loan, construction loan, home improvement loan, etc...) Additional uses include;

• The appraisal can be a useful tool when selling a home and trying to establish its value before listing the property on the market;

• If your paying PMI (Private Mortgage Insurance) the appraisal is necessary to demonstrate to the lender that the equity in the property is greater than 20 percent thus, the need for PMI is no longer necessary. This can reduce your monthly payments!!!

• Appraisals may also be needed for estate settlement, estate planning, employee relocation or tax certiorari..

3. What Qualifications should I look for in my appraiser?

All states require that a real estate appraiser be licensed an/or certified to in order complete an appraisal assignment. The requirements for this varies depending on classroom hours and experience. Currently, a minimum of 125 classroom hours and two years appraisal experience are required.

A select few appraisers further advanced their knowledge base and belong to the Appraisal Institute which bills itself as the premiere real estate appraisal organization in the nation. The Appraisal Institute requires that its members complete a more rigorous education with routine testing, continuing education requirements and a demonstrated knowledge of the industry. Members of the Appraisal Institute hold either an SRA (residential member) or MAI (commercial member) designation. Typically, members of the Appraisal Institute are among the most qualified real estate professionals in the industry.

4. What is the Appraisal Process?

The Appraisal (Valuation) process begins when the appraiser identifies the problem and ends when the appraiser reports a conclusion to the client. This involves six steps which are consistently applied to all assignments;

1. Definition of the Problem: In a nutshell, this involves identifying the property to be appraised, assessing the scope of the appraisal assignment, defining the valuation date, the use of the appraisal and the property rights to be appraised.

2. Data Collection: This is a preliminary analysis to determine the character and scope of the assignment. It involves researching the local market, identifying the value influencing factors and the appropriate valuation tools necessary.

3. Highest and Best Use Analysis: The concept behind this analysis is that the land is the main source of all value and the improvements to the land (i.e. the house/building erected on the site, garages, pools, etc...) contribute to the land value. Therefore, the improvements should contribute the greatest possible return. For instance, a building lot in New York City should not be improved with a single family house if a large multi family building is allowed. It is obvious in this instance that a multi-family building would contribute a greater amount to the land value than would the single family house.

4. Land Value Estimate: Because the land is the source of all value, a precise estimate of the land value is needed. The most typical method of estimating land value in New York is via the Sales Comparison Approach or the Extraction method.

5. Application of the Three Approaches to Value: These are three specific appraisal procedures which when employed correctly result in three separate indications of value. The three approaches include the Cost Approach to Value (how much would it cost to acquire a site and construct a exact reproduction of the improvements?) The Sales Comparison Approach (How much are similar properties selling for in my area?) and the Income Approach (how much could I rent my property for today and how much will this be worth in the future?).

6. Reconciliation of the Value Indicators: Based on the three approaches to value as defined above, which one is most applicable to the definition of the problem.

5. Why Should I Choose The New York Appraisal Mgmt. Co.?

• Professionalism: With more than eleven years of experience, we are able to provide you with the exact product you need. Whether it be a limited appraisal (i.e. letter of opinion), a form report (acceptable to all lenders) or a complete narrative (typically utilized by attorneys). We will take the time to speak with you to understand your needs for the appraisal and develop the exact product which satisfies those needs.

• Quality: All our appraisers are state licensed and/or certified and each report is reviewed by a member of the Appraisal Institute. As such, your report is guaranteed to be of the highest possible quality. Further, each appraiser specializes in a specific and defined area. Their knowledge is complete, in-depth and up to date regarding your individual neighborhood.

• Service: The appraisal is a commodity and what sets the New York Appraisal Management Co. apart is its commitment to service. Our appraisals are prepared with you in mind and delivered in the timeframe promised.

Albert Gabberty, SRA @ NYAMC

updated: 08/26/02 02:09 PM