An appraisal is an opinion of value
It is a researched, supportable conclusion developed for a specific property, effective date, intended use, and client.
UCAP Appraisal basics
9 things you may not know about appraisals
Appraisals serve many purposes, use more than one analytical method, and sometimes produce an answer different from an expected sale price.
It is used for more than a purchase
Assignments support lending, sales, taxation, divorce, eminent domain, PMI removal, foreclosure or REO, FHA/VA lending, estates, and liquidation.
Value can be retrospective
A retrospective appraisal estimates value as of an earlier date, which may be needed for estates, tax matters, litigation, or other legal purposes.
Sales comparison is one approach
The appraiser analyzes recent, relevant sales and adjusts for meaningful differences between those properties and the subject.
Income can indicate value
Income-producing property may be analyzed through direct capitalization or yield-capitalization techniques.
Cost can indicate value
The cost approach considers land value, replacement or reproduction cost, and depreciation. Detailed assignments may use segregated-cost analysis.
Markets change
Fast-moving prices, interest rates, limited data, and changing buyer behavior can make yesterday’s sale less representative today.
Comparable selection has constraints
Lenders and assignment conditions may emphasize recent sales—often within six months—while the appraiser must still find the most relevant market evidence.
A low appraisal creates choices
Parties may renegotiate the price, bring additional funds, challenge material errors through the lender, or use a contract option to walk away.
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