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It is commonly said that real estate is all about, “location, location, location.”  While the location of the home you are purchasing is very important, there are numerous other factors that go into determining the value of the property.  Because the average person isn’t trained to accurately evaluate how much a property is worth, an appraisal is needed to provide an unbiased opinion of the value.

You may be asking why someone else’s opinion of how much you are willing to pay for a home matters if you and the seller agree upon a price.  An appraisal can be costly depending upon the complexity and time needed to evaluate the property, so why spend the extra money if you know that you want to purchase it anyway?

Lenders, especially for residential mortgages backed by Government Sponsored Enterprises (GSEs) such as Fannie Mae (FNMA) and Freddie Mac (FHLMC), require a current appraisal report provided by a state licensed or certified appraiser before issuing a mortgage.  The lender will typically only issue a mortgage up to, but not exceeding, the value of the property as determined by the appraisal report.

How does the appraiser determine the value of a property?

Appraisers adhere to a strict set of guidelines known as the Uniform Standards of Appraisal Practices (USPAP) when determining the value of a property.  This ensures that similar properties are evaluated by the same criteria in order to more accurately determine the value of each unique property.

For more details on some of the factors that go into determining residential property values, read our article “How Appraisers Determine Home Values.

When is the appraisal performed?

The lender or mortgage loan originator will place an appraisal order once the buyer applies for financing.  This occurs after both parties accept the offer contingent upon the findings of a home inspection and property appraisal.  It can be beneficial to the buyer to have a thorough home inspection performed before the appraisal so that the details of the home inspection report can be taken into account by the appraiser who is determining the value of the property.

Why appraisal are important:

Appraisals are a required part of the home buying process, especially when the buyer is seeking a mortgage from a lending institution.  It is important for both the buyer and seller to understand the appraised value of the property before closing to make sure that everyone is getting a fair deal.  Because this process is so important, banks require appraisals to be performed by licensed professionals with a thorough understanding of all the factors that go into determining property values.

What are the qualifications for becoming a residential appraiser in Florida?

The basic requirements for becoming a trainee appraiser in the state of Florida are:

  1. Must be 18 years old and have a high school diploma
  2. Complete 100 hours of approved Trainee courses (View Trainee Courses)
  3. Submit a state application

To become a State Certified Residential Appraiser, you must:

  1. Have a bachelor’s degree from an accredited university
  2. Have at least 2,500 hour of documented appraisal experience
  3. Complete 200 hours of approved appraisal courses (View State Certified Courses)
  4. Submit a state application.
  5. Pass the residential national exam and the Florida supplemental exam.

This article is brought to you by Gold Coast Schools, Florida’s leading professional licensing school.  While specializing in education for real estate, appraisal, insurance, construction, and many other industries, our blog articles are developed to answer commonly asked questions related to the fields that we teach.  Check out our other blogs and visit our available programs if you are interested in learning more about these topics.  Our helpful Career Counselors can be reached at 1-800-732-9140.