Appraisals 101

Navigating the ins and outs of the appraisal process might be daunting, but that’s where Jennifer Wilson-Oechsle comes in. She is a licensed appraiser with AgCredit. Below she answers fundamental questions on what appraisals are, when an appraisal is needed and how to best prepare for one.

 

What is an appraisal?

 

Simply put, an appraisal is a process of determining an opinion of value. 

 

AgCredit has four certified appraisers on staff. Our team completed training and state exams to obtain Ohio Certified General Appraiser Licenses. We also have two appraisers certified in Indiana. 

 

What are the different types of appraisals?

 

There are three common types of appraisals for farm real estate. The first is a bare land appraisal. This type of appraisal might be cropland or wooded areas without any buildings. 

 

The second type is an improved appraisal. This includes traditional buildings such as homes on large tracts of land, machine sheds, shops, barns and grain bins. 

 

The third is a specialized appraisal. These typically include swine and cattle confinement operations, dairies and greenhouses. 

 

AgCredit also uses residential appraisers to complete appraisals on homes for our residential lending department. 

 

What is the process for completing an appraisal?

 

Appraisers gather property information from public records such as auditors and recorders, and interview buyers or owners to assess the property quality. After gathering property information, an appraiser will look for sales that have occurred within the surrounding areas, selecting comparable sales based on date of sale, location, soil types, drainage quality and other property characteristics. 

 

The appraisal process typically consists of three different approaches: the cost approach, income approach and sales comparison approach. Each approach has its strengths depending on the type of property that’s being appraised. 

 

The cost approach is typically used for improved properties. The resulting value of the appraisal is the value of the land plus the depreciated value of any buildings. The income approach is used for income-generating properties, such as contract swine barns. The sales comparison approach is typically used for bare land properties and residential homes.  

 

When is an appraisal needed?

 

At AgCredit, we need appraisals in order to know the value of the collateral used to secure loans. Our team can also complete appraisals to help buyers and sellers set purchase prices, estimate values for estate planning or settling estates. 

 

 

How do borrowers or owners prepare for an appraisal?

 

One of the best ways to prepare for an appraisal is to get as much information about the property as possible. For farmers and landowners, knowing the drainage quality of a farm is particularly important.  For homeowners, it’s knowing when updates were made such as kitchen and bathroom remodeling or when the roof, windows and mechanicals were last replaced.  

 

How can I contact AgCredit’s appraisal team?

 

Email appraisal@agcredit.net for more information about our appraisal services.