Real estate appraising is a critical function in the real estate and accounting industries, providing objective, unbiased assessments of property value. They provide a foundation for determining a property’s worth in the market. These valuations are crucial for a variety of purposes, including, but not limited to, estate planning, property tax appeals and purchase price allocations. 

Here is a break down on the importance of real estate appraising and how working with qualified professionals can help strategize and maximize your real estate activity.  

Real Estate Appraiser Qualifications 

The qualifications of a real estate appraiser play a significant role in ensuring the accuracy and reliability of these appraisals. Ensuring your appraiser holds the right qualifications may be the difference between winning and losing in court, or with the IRS. The following are among the highest qualifications for real estate appraisers and each signifies a level of expertise and professionalism that sets appraisers apart in the industry.

• Member, Appraisal Institute (MAI): Conferred by the Appraisal Institute, which previously stood for "Member of the Appraisal Institute." It is one of the most prestigious qualifications in the field of real estate appraisal. To obtain the MAI designation, appraisers must meet rigorous standards of education, experience and ethical conduct.
• Senior Residential Appraiser (SRA): Also issued by the Appraisal Institute, SRAs specialize in residential real estate and must hold a four-year degree from an accredited institution, complete 4,500 hours of experience (including 2,000 in residential appraisals), and pass seven exams covering 181 hours of coursework on appraisal principles, residential valuation, report writing and professional standards.
• Certified Commercial Investment Member (CCIM): CCIM designees are proven leaders in commercial real estate who care as much about the expertise, ethical responsibility and quality of their service, as they do about the result.

The Appraisal Report 

Real estate appraisal reports serve a multitude of purposes, each requiring a precise and accurate valuation. The key applications are estate planning, property tax appeals, lending and purchase price allocations.

In estate planning, accurate property valuation is essential for determining the value of an estate. This information is crucial for calculating estate taxes, distributing assets among heirs and planning for the future. An appraisal report provides a clear, defensible valuation that can withstand scrutiny from tax authorities and other interested parties. For example, when valuing real estate within an estate, an appraiser must consider a variety of factors, including market conditions, property condition and comparable sales. A MAI appraiser’s expertise ensures that these factors are thoroughly analyzed and accurately reflected in the valuation.

Purchase price allocations involve assigning value to the various assets acquired in a transaction, including real and personal property, and intangible assets. Accurate allocation is essential for financial reporting, tax planning and strategic decision-making. An appraisal report for purchase price allocation must consider the value of the real estate relative to other acquired assets. This requires a thorough understanding of both real estate markets and the specifics of the transaction. An MAI appraiser’s ability to integrate complex financial and market data ensures the allocation is accurate and defensible.

Real Estate Appraisals for Property Owners 

Property owners often seek real estate appraisals to contest property tax assessments. An appraisal report can provide evidence that a property’s assessed value is higher than its market value, which can result in a reduction of property taxes. 

To prepare for a property tax appeal, an appraiser must conduct a detailed analysis of the property and its market. This includes reviewing assessment records for mistakes of record, researching recent sales of comparable properties, analyzing market trends and assessing the property’s condition. An MAI appraiser’s extensive training and experience enable them to produce a comprehensive and persuasive report that can effectively support a tax appeal.

How We Can Help

Real estate appraising is a sophisticated and essential function in the real estate industry, requiring a high level of expertise and professionalism. The MAI designation represents the pinnacle of achievement in this field, ensuring that appraisers possess the necessary education, experience and ethical standards to provide reliable valuations. Whether for estate planning, property tax appeals or purchase price allocations, the insights provided by an MAI appraiser are invaluable, supporting informed decision-making and contributing to the integrity of the real estate market. 

Valuing a property is complex and requires a unique, disciplined skillset. At Doeren Mayhew, our Senior Accredited Appraisers have the skills to get it right. You’ll walk away with a well-supported appraisal to confidently make decisions related to your real estate portfolio.