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Other than experience and fee structures, how does one select a qualified appraiser? How is the financial officer to know that the appraisal on his desk is accurate, and professionally executed? After all, an appraisal is an opinion of value based upon individual judgments of the issuing professional(s) and while a reasonable statement of limiting conditions can set the stage for a fair and revealing appraisal, too many caveats will relegate the appraisal to a file-filler status.
If one were to ask several different appraisers to evaluate the same set of assets, it is conceivable that distinctly different valuations would result. However, if each appraiser had similar backgrounds and experience, then the final totals would tend to be close. However, most lenders or appraisal seekers do not want to spend the time or money to obtain several versions of appraisals on the same assets.
For the service buyer to understand an appraisal and its methodology, both the client and the appraiser must comprehend a few basic principles. First, it is important to review the commonly used "value concept definitions." The following five types of appraisal concepts are those which an accredited appraiser should have the knowledge, experience and resources to perform:
Auction Value Appraisal--Also referred to interchangeably as Forced Sale Liquidation Value or Liquidation Value appraisals. An opinion of the expected gross dollar amount to be realized at a professionally conducted and promoted public auction sale as of the date on the appraisal.
Orderly Liquidation Value Appraisal--An opinion of the expected gross dollar amount...