Basics of Appraisals & Appraisers that Perform Them

Basics of Appraisals & Appraisers that Perform Them

How appraisals are used

A real estate appraisal is an independent estimate of a property's market value. Typically, the appraisals are used in the mortgage lending process, litigation or when estimating property value during the buying or selling process, for ad valorem tax purposes or for insurance purposes.

How they are performed

A real estate appraiser typically works according to a contractual agreement. In general, appraisers follow three well-established methods and approaches to estimate the market value of real property. They are:

Sales Comparison Approach: a set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have recently sold.

Cost Approach: a set of procedures through which a value indication is derived by estimating the current cost to construct a reproduction of the existing structure deducting the accrued depreciation and adding the estimated land value.

Income Approach: a set of procedures through which an appraiser derives a value indication for an income producing property by converting its anticipated income potential into property value.

Appraiser Licensure, Certification & Registration

Ohio not a mandatory state

Ohio is not a mandatory licensure state. This means that appraisers are not required to be licensed, certified, or registered with the Division in order to perform appraisal work in Ohio .

However, an appraiser must be licensed or certified if the appraisal is prepared for a federally-related transaction, according to Title XI of the United States Code, or if the appraisal is prepared in conjunction with a mortgage loan, according to Senate Bill 185 of the 126th General Assemble.

Those appraisers that choose to become licensed, certified or registered with the Division will do so in one of the following categories:

State-Certified General Real Estate Appraiser

Any person certified to appraise all types of real property (i.e., agricultural, commercial, industrial, residential).

State-Certified Residential Real Estate Appraiser

Any person certified to appraise 1-4 unit single-family residential real estate without regard to transaction value or complexity.

State-Licensed Residential Real Estate Appraiser

Any person licensed to appraise non-complex 1-4 unit single-family residential real estate having a transaction value of less than one million dollars and complex 1-4 unit of single-family residential real estate having a transaction value of less than two hundred fifty thousand dollars.

State-Registered Real Estate Appraiser Assistants

Any person who satisfies the registration requirements for participation in the development and preparation of real estate appraisals and who holds a current and valid registration.

Regulation of Real Estate Appraisers

The Division enforces the regulatory program for appraisers that must be licensed, certified or registered in order to perform appraisals for federally related transactions. This includes the processing of appraiser applications, regulation of the examination process, approval of appraiser continuing education courses, responding to consumer inquiries and complaints and the investigation of appraisers for possible violations of Ohio license law.

The Ohio Real Estate Appraiser Board, consisting of 5 members appointed by the Governor. It periodically reviews the standards for preparation and reporting of real estate appraisals, establishes examination specifications, defines experience requirements and determines the appropriate disciplinary action to be taken against a licensed, certified or registered appraiser.

Hiring an Appraiser

In most cases, lending institutions hire appraisers to perform an estimation of the value of real property. Should the consumer find it necessary to hire an appraiser, make sure to consider these tips:

Check with the Division to see whether or not the Appraiser is licensed, certified or registered with the State of Ohio. These appraisers meet minimum uniform qualifications and have agreed to conduct appraisals according to guidelines established by the National Appraisal Standards Board of the Appraisal Foundation. If the appraiser is not licensed, certified or registered with the State of Ohio, the Division is without jurisdiction to review any future complaints you may have against the appraiser.

If the appraiser is licensed, certified or registered, check with the Division to see whether or not there has been any disciplinary action taken by the Real Estate Appraiser Board against the appraiser. Appraisers may be disciplined by the Board for any violation of Ohio license law, ranging from minor omissions in an appraisal report to dishonesty, fraud and misrepresentation.

Accessing a list of all of Ohio’s Licensed, Certified or Registered Appraisers

Every appraiser that is licensed, certified or registered by the Division is reported monthly to the Appraisal Subcommittee of the Federal Financial Institutions Examination Council. The Appraisal Subcommittee maintains an online database of every licensed, certified or registered appraiser nationwide. The web address of the Appraisal Subcommittee is: www.asc.gov. Follow these steps to access the database:

Once on the Appraisal Subcommittee home page, click the link "ASC National Registry";

At the bottom of the screen, select "Standard Query";

From the list of searching options, select #2 "Appraisers Within a State";

Select "Ohio" from the drop down menu;

The results are organized by the last name of the appraiser you are researching;

Clicking the name of an appraiser will bring up the following information: type license (one of the four categories listed above), license number, effective date of licensure, expiration date of license, the appraiser’s address and phone number.