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Electronic Appraisal Questions General Appraisal Questions
What is Appraisal Link?
Appraisal Link is The Ponce Group, LLC's answer to all our business clients' needs. Many business' do not have the time, money or techinical expertise to get an electronic document interchange up and running. Appraisal Link is online via the internet and provides a secure method for our customers to enter appraisal requests, pay by credit card, view status'/notations of appraisals while in progress, download secured appraisals when completed, view metrics on delivery time, view live invoicing information in real time, submit addresses for preliminary comparable requests, historically search orders and much more. Appraisal Link also has a full tracking and reporting module for all our customers to take advantage of. Best of all it's free!

What is an Electronic Appraisal?
An Electronic appraisal is a digital version of a traditionally paper appraisal complete with signature.

What is EDI?
EDI stands for Electronic Data Interchange. It is one of the older industry standard's for transmitting digital documents securely from business to business or site to site.

What is a PDF?
PDF stands for Portable Document Format and is a commonly used file format for transferring electronic information across different computer platforms (e.g., Windows®, Macintosh®, UNIX, or OS/2®). In order to view and print a PDF file you will first need to download and install a copy of the
Adobe® Acrobat® ReaderTM. The PDF format provides a page-by-page view of documents, exactly as they would appear in their printed form. PDF also allows a keyword search.

What is a digital signature?
Digital Signatures are an federally mandated standard cryptographic method for digitally signing documents with a computer image of a physical signature. To sign a digital signature to a document, by specification a user must type their pass phrase, thereby inhibiting others from signing with their signature.?

For more information on the specification click here.
For more information on "The Electronic Signatures Act" click here

Why would I want an electronic appraisal?
Speed, Speed, Speed. Typically an electronic appraisal can be delivered 1 to 2 days faster than a traditionally couriered paper appraisal. This means better customer service for you and the capacity for more work for us. It's a win, win situation.

Are real estate appraisals really necessary?
Because much private, corporate, and public wealth lies in real estate, the determination of its value is essential to the economic well-being of society. It is the job of the professional appraiser to determine these values by gathering, analyzing, and applying information pertinent to a property.

Unquestionably, the professional opinion of the appraiser, backed by extensive training and knowledge, influences the decisions of people who own, manage, sell, purchase, invest in, and lend money on the security of real estate. And because the appraiser is trained to be an impartial third party in the lending process, this professional serves as a vital "check in the system," protecting real estate buyers from overpaying for property as well as lenders from over lending to buyers.

What qualifies someone to be a real estate appraiser?
Many states require all real estate appraisers to be, at a minimum, state licensed or state certified and have fulfilled rigorous education and experience requirements and must adhere to strict industry standards and a professional code of ethics as promulgated by the Appraisal Foundation. To see the specific requirements for any state
click here.

How long does an appraisal take?
The physical inspection of the real property being appraised can take from approximately fifteen minutes to several hours, depending upon the size and comlexity involved.

After the initial inspection of the property the appraiser spends time touring through the neighborhood or area. The purpose of this tour is to search for comparable sales (other properties that are similar to the property being appraised) that have sold within the last year or so. When the field work is finished, the appraiser completes the report at his office. The report can consist of a short form report (typically under ten pages) to a long narrative report which can sometimes exceed a hundred pages. A short form report usually takes between three to six hours to complete. A narrative report can take weeks or sometimes even months, depending upon the complexity of the assignment.

Does an appraisal include an engineers report or whole house inspection?
The appraiser is not a whole house inspector, engineer, architect, electrician, plumber, H.V.A.C. technician or contractor. The appraiser briefly walks through the house to get an idea of the general condition and room count. An appraisal is not a guarantee of condition. The appraiser will ask about any visible problems and those which may not be visible, and will do his/her best to gauge any impact on value attributable to those problems. You are encouraged to seek the advice of experts if you have any questions about the structural or mechanical aspects

What is the difference between a short form report and the more traditional "Fannie Mae" (URAR) Uniform Residential Appraisal Report and other "lender" orientated reports?
A "Fannie Mae" - URAR form report has many items required by the secondary mortgage lending market, that are not neccesarily needed in a simple report to find the market value. Both primarily rely on a direct sales comparison or market approach with a comparison grid (see below) to determine the market value of the subject property. The lenders report has many additional arbitrary requirements which have little bearing on the value found by a report needed for many other purposes. The traditional "lender" reports need census tract & smsa information for tracking lending patterns. Some lender reports require a lot of the appraisers effort to determine and substantiate how much additional rental income is available to support a higher mortgage. In addition, a great deal of detail is required to help the lender determine what if any, necessary repairs might be needed before the property meets their underwriting requirements. All of these things and much more, may be quite important for a lender, but probably are useless for most people, who just want to know what a property is worth for a variety of reasons. Our short form reports are particularly well suited for helping a seller to price a home for sale, helping a buyer to decide how much to offer or pay for a home, for estate tax, gift tax, tax grievance, uncontested divorce & most any other potential use other than for obtaining a mortgage or in litigation where the report will be used in conjunction with expert testimony.

What Services do appraisers provide?
In our complex society, you may need and use the services of a professional real estate appraiser for a variety of reasons. Depending upon an appraiser's designation and qualifications, he or she can provide some or all of these services: Appraisals - Residential or Commercial; Counseling and Consulting; Evaluations; Expert Witness Testimony; Litigation Preparation; Feasibility Studies; Market Analysis; Market Rent & Trend Studies; Tax Assessment Review and Advice or Zoning Testimony.

Can I get a copy of an appraisal a lender ordered on my home?
Under the Equal Credit Opportunity Act, your lender must provide you with a copy of the appraisal report upon your written request. If you are dissatisfied with any information contained in your appraisal report, you should contact your lender immediately.

Is there anything I can do to speed up the process?
The following Items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time.

A survey of the house and property; A deed or title report showing the legal description; a recent tax bill; a list of personal property to be sold with the house if applicable; a copy of the original plans & specifications, The date and purchase price you paid when you purchased the property; a list of recent improvements & cost as well as any other information you feel may be pertinent.

What constitutes a typical appraisal?
The appraisal process is an orderly and concise method of reaching an estimate of value. The process has six major steps which include: definition of the problem, preliminary survey and appraisal plan, data collection and analysis, application of the three approaches to value, reconciliations of value indications, final estimate of defined value. This process assists the appraiser in reaching a sound conclusion. The major phase of this process involves the application of the three approaches to value which include the Market Data Approach, the Cost Approach and Income Approach. The three approaches are reconciled and the value via most applicable approach, in the opinion of the appraiser, is selected as the final estimate of value. In most residential appraisals, particulary those of single or two family dwellings, the direct sales comparison or market approach best reflects the actions of buyers and sellers and is the most convincing and defendable approach to value.

What is the market approach?
The market or direct sales comparison approach to an estimate of value is a process of comparing market data, that is, prices paid for similar properties, prices asked by owners, and offers made by prospective purchasers or tenants willing to buy or lease. Typically a comparison grid is used and adjustments are made to each of the comparable sales used for major differences between the comparable and the subject property for such items as location, gross living or building area, lot size, condition/effective age, market conditions, degree of remodeling, construction quality and significant amenities, ie: fireplace, jacuzzi, in ground pool, garage, deck, patio, porch and central air conditioning etc. In the market approach, the appraiser attempts to both gauge and reflect the anticipated reaction by a typical purchaser to the subject property.

What is a comparable sale?
A comparable sale is a property, that is similar to the subject property in most respects, is located in a similar (nearby) location, and has sold recently at arms length. The selection of comparable sales is in most residential appraisals, the single most important determining factor in establishing value. It is the appraisers responsibility to adequately research the local real estate market and determine which comparable sales best represent the value characteristics of the subject property.

What is an arms length transaction>
An arms length transaction is one in which both seller and purchaser act completely independently of each other and have no connection or relationship to each other.

What is Market Value?
Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

What is the Cost Approach?
The cost approach combines an estimate of land value with an estimate of depreciated reproduction or replacement cost of the improvements. The principle of substitution is the basis of the cost approach, in that no rational person will pay more for a property than the amount for which he can obtain, by purchase of a site and construction of a building, with undue delay, a property of equal desirability and utility.

What is the income approach?
The income approach is based on an estimate of net income from the operation of an income producing property and the selection of the property capitalization rate from market indications of similar properties. The principle of anticipation is the basis of the income approach and affirms that value is created by the expectation of benefits to be derived from possession, operation and/or capital gain at resale.

What does highest & best use mean?
Typically, highest & best use means the use or utilization that provides the most profitable return on investment. It is that use, selected from reasonably probable and legal alternative uses, which are found to be physically possible, appropriately supported and financially feasible to result in the highest possible land value.

What rules must appraisers follow? The ASB sets forth the rules for developing an appraisal and reporting its results. In addition, it promotes the use, understanding and enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

FIRREA requires that real estate appraisals used in conjunction with federally-related transactions be performed in accordance with USPAP. More than 80,000 state certified and licensed appraisers are currently required to adhere to USPAP. USPAP contains the recognized standards of practice for real estate, personal property and business appraisal.

The authority of USPAP extends beyond FIRREA. Since 1992, the Office of Management and Budget (OMB) has required federal land acquisition and direct lending agencies to use appraisals in conformance with USPAP.

Click here for the current USPAP

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