How are appraisers trained?
To get licensed as an appraiser, trainees have to complete 75 hours of initial training, followed by 2,500 hours of experience in the field, and then another 75 hours of coursework before they can sit for the exam.
The first 75 hours of training consists of three courses: basic appraisal principles, basic appraisal procedures, and the Uniform Standards of Professional Appraisal Practice course.
They complete their hours of practical experience under a certified appraiser’s supervision. The supervisor must document their work and then submit it to the state’s regulatory board when their trainee applies for their license.
The requirements for the remaining hours of continuing education vary depending on the state and the type of license.
Appraisers have to pass an examination and meet minimum requirements as set by the Appraiser Qualifications Board, or AQB, which is authorized by Congress.
Who does a hybrid appraisal?
With a hybrid appraisal, the appraiser reviews the final numbers, and they have photos available to review, but they may not be as heavily involved with (for example) visual property inspection or comp analysis. They likely will hire a third party to do the visual inspection and take measurements and photographs.
The third party could be an appraisal trainee, a home inspector, or a real estate licensee. They likely won’t be a fully licensed and certified home appraiser, though they could have other qualifications, but the appraiser will review their work. You’ll get the results sooner because a hybrid appraisal takes less time than a full appraisal.
Hybrid appraisals have become more common in refinance mortgage applications, and some lenders began allowing them during the pandemic. If you’re putting down more than 20% and the lender has fewer concerns about the home’s value and the risks involved with repayment, they might allow a hybrid appraisal.
A hybrid appraisal costs less than a full appraisal, so it’s a great option if you’re paying cash and don’t need a lot of reassurance about the home’s value.
Who does a BPO or CMA?
Who prepares a broker price opinion (BPO) or comparative market analysis (CMA)? Brokers and real estate agents!
They use similar tactics as appraisers do — neighborhood analysis and comp analysis, for example — and could also include a visual inspection.
Your agent will likely prepare a CMA when you’re drawing up your offer, particularly looking at comps so that you can offer a fair but competitive amount. And when a real estate agent works with a seller, they will also use a CMA to determine a good list price.
Real estate agents are very educated and know a lot about real estate; however, they aren’t trained appraisers, so that’s why a CMA or a BPO will cost less and also aren’t useful in an actual transaction scenario.
It can be an unwelcome surprise if your appraisal comes in low after your agent prepared a CMA. After all, the appraiser should have used the same data! But it does happen.
In Chaney’s experience, “when there’s a difference in opinion, it’s because almost always an appraiser is from out of town and is unfamiliar with the market. Maybe they didn’t take into consideration, ‘Hey the front part of this neighborhood is desirable, and the back section isn’t because those houses back up to the highway.’”
It happened to Chaney recently, and she was able to get it overturned for her buyers because the appraiser missed four or five more similar comps and a better fit for the home. If it happens to you, you’ll want a good agent on your side to help you navigate the next steps.
Who does an online appraisal?
Before making your offer, you probably went to a major real estate website and looked up the home’s estimated value. Setting your expectations based on these automated valuation models can be a recipe for disaster, or at least disappointment.
The home values on these sites are just calculated by a robot behind the algorithm — often with no humans involved at all beyond building the algorithm.
“They are not taking factors into account such as quality, condition, and so on,” Cullen points out.
“For instance, in New England, we have such a mixture of property types. We may have a Colonial-style home, next to a ranch-style home, a clam shack down the street, and also some commercial influence mixed in.” Each of those homes would appraise differently when a qualified, licensed appraiser calculated their value, but an algorithm might not know the difference.
While online appraisals can serve as a guide, you’re better off leaning on your agent’s expertise when writing an offer and using a certified appraiser for a mortgage.
Having a home appraised is generally a straightforward process. You can count on your state’s licensure requirements to protect you, but if anything comes up during the appraisal hurdle of your homebuying race, you’ll definitely want an experienced agent by your side.
Header Image Source: (Kathleen Culbertson / Unsplash)
