Q. What is a real estate appraisal?

A. A REAL ESTATE APPRAISAL is an estimate or opinion of value of real property (does not include personal property).

Q. What is a real estate appraiser, and are they licensed?

A. The real estate appraiser is a disinterested third party who does not create but rather interprets the market to arrive at a value estimate. Real Estate Appraisers must be licensed or certified within the state they practice their business. There are qualifications in residential and/or commercial/industrial levels. Insure your appraiser is experienced for your type of property, and if the report is to be used by your financial institution, make sure they are on that institutions approved list.

Q. What does an inspection include, and how long will the inspection take?

A. The appraiser's inspection may take less than an hour on the average house, but it may take several hours for a commercial or industrial property (not including any travel time).

The exterior inspection of the property involves measuring the property, looking for obvious faults: cracks in foundation, dry rot, peeling paint, or a bad roof. On site improvements are noted: well?maintained sidewalks and driveways, landscaping, fences, pools, porches, patios, or other outside amenities. Exterior pictures of the property are taken (and in some cases interior pictures).

The interior inspection of the property includes a visit of every room (including closets) on every level (including the basement). The appraiser will check behind doors and inside closets for problems. While looking for the "good stuff" the appraiser is also checking for any negative items. Is the house still level? Do doors and windows close properly? Is there adequate insulation? Are floors, walls and ceilings in good condition? What special features and amenities are on site or proposed (fireplace, appliances, built?ins, window treatments)? What are the ages of major items (roof, furnace, A/C, floor coverings, water heater, siding, windows, and others)? For a commercial or industrial property, the interior inspection takes significantly more time and depth, but follows the general guidelines listed above.

MAKE SURE YOU TELL THE APPRAISER OF ANY ITEM THAT YOU CONSIDER OF SIGNIFICANT VALUE OR IMPORTANCE. DO NOT ASSUME ANYTHING!

After the property inspection the appraiser must now start his research and process to value the property.

After returning to the office, the appraiser uses three methods of estimating a property's value: the Sales Comparison Approach, the Cost Approach, and the Income Approach.

The Sales Comparison Approach makes use of properties similar to the subject in size, quality, and location that have sold. A comparison is made to the subject with adjustments being made to the comparables to reflect differences in amenities, size, location, age and condition. Exterior pictures of the comparables are taken, in addition to pictures already taken of the subject property, since most lenders require these.

The Cost Approach is based on the cost to replace or reproduce any improvements to the property, less depreciation, plus the value of the land, to arrive at a net value.

The Income Approach provides an estimate of value based on what a private investor would pay for the property based on the net income the property would produce. This approach is typically not applicable for single-family residential property, unless rented.

After a thorough analysis of all general and specific data that has been gathered from the marketplace, a final estimate of value is made. Many times weight is given to one or more of the above approaches, and sometimes one approach or another may not be applicable and not determined. Generally, all three approaches will be researched to determine if they apply to your property.

When completed, all copies of the appraisal report (for financing purposes) are sent to the lender and we cannot give out copies to the borrower. Therefore, requests for copies must be made to the lender.

If you have ordered the appraisal on an individual basis, you can be assured that we maintain strict confidentiality of the report. If you plan to use the report for financing, the financial institution must be the ordering entity and not you as an individual.

J. L. FELDERMAN, Certified in IOWA AND ILLINOIS

R. J. FELDERMAN, Certified in IOWA AND WISCONSIN