NEW YORK (CNN/Money) – There's almost no buying a home – or building a shopping mall, for that matter – without the services of a real estate appraiser.
Often referred to as "the eyes and ears of the lender," a real estate appraiser is the person who assesses the value of a property and highlights any defects. That way, the lender can be assured the property is worth at least as much as the loan amount.
Appraisals also are used for tax assessment, government acquisitions of private land, property disputes, valuing estates, and proposed business mergers or closures.
Though many appraisers work independently or run small firms, some hold full-time positions with banks, real estate firms, insurance companies or local governments.
Appraisal work has been described as a combination of art and science. It draws on technical expertise as well as informed, impartial opinion and analysis. Among their tasks, appraisers must:
- Collect and analyze data from multiple sources, everything from blueprints to public records
- Stay current on government regulations, zoning laws and appraisal standards
- Understand construction and be familiar with building materials
- Know the marketplace, the local area and the trends affecting it
- Inspect properties and produce written reports.
Some appraisers may opt to do both commercial and residential appraisals, but it's more typical that they specialize in one or the other. Residential appraisers tend to have more assignments but they're shorter-term, while commercial appraisers have fewer projects but ones which may last for months, said Donald E. Kelly, vice president of public affairs for the Appraisal Institute.
The more complex a property to be appraised – for example, a multimillion-dollar estate or a farm -- the more an appraiser can charge, Kelly said.
Appraisers are busiest during periods when the real estate market is hot, but they don't necessarily lack for work when it's down because appraisals are required for foreclosures, Kelly said.
The hours vary. They tend to be more regular if an appraiser works for an employer such as a bank or insurance company. But independent appraisers set their own hours. Like many small business owners, that can mean working well over 40 hours a week, or, as Kelly put it, "all the time."
The road to six figures typically takes up to five years. Usually, two years of appraisal courses and on-the-job training are required before sitting for a state licensing or certification exam. Getting designations beyond that – which allow appraisers to charge more for their services --- can take another two to three years, Kelly said.
The Appraisal Institute notes that a liberal arts education is a good basis for becoming a real estate appraiser. Particularly helpful is a background in, among other things, economics or finance, architecture, law or engineering. (For more on what it takes to become an appraiser, click here.)
Preliminary results from a nationwide survey conducted this year by the Appraisal Institute indicate that 34 percent of appraisers had gross incomes of $100,000 or more in 2003; of those, 7 percent earned between $150,000 and $200,000 and 9 percent earned $200,000 or more.
Another 13 percent earned between $80,000 and $100,000.