An appraisal fee is a monetary payment paid to an expert for determining the fair market value of property. The expert is usually called an appraiser, and he or she is trained to determine the worth of houses, jewelry, antiques and other items of value. Property owners may choose to pay an appraisal fee when real property is about to be financed, taxed, transferred or sold and a neutral opinion of its value is needed. Other situations in which paying an appraisal fee may be warranted include donating private artwork to charity and a fair market value is needed for tax purposes or setting up insurance policies for valuables, such as jewelry.
Some appraisers, such as real estate appraisers, are certified or licensed, and their appraisal fee is considered a routine part of any real estate transaction. In real estate, an appraisal may be ordered by a bank, with the fee being passed along to the buyer as part of the mortgage application process. Alternately, a seller may order his own appraisal to determine the fair market value before placing a house on the market. In this case, the appraisal fee would be paid from the seller's pocket. As part of their fee, many appraisers provide a comprehensive written report explaining their appraisal and how they arrived at their estimate of the item’s or home's fair market value.
In cases in which the appraiser is an independent contractor performing appraisals for a variety of customers, the appraisal fee often is paid directly to the appraiser. Sometimes, however, the fee is paid to an appraisal company, which assigns an appraiser to appraise the item. The appraisal fee may vary depending on the item being appraised and the location. For example, real estate appraisals may cost more in a major metropolitan market than in a smaller city; some appraisers also charge traveling expenses in some markets.
The appraisal fee itself is usually for a set dollar amount or a set range, depending on the complexity of the item being appraised and the time needed to complete the work. In the case of real estate, the cost generally is based on size and overall home worth; a luxury home with seven bedrooms, four bathrooms and 10,000 square feet (about 930 square meters) of living space likely would require a higher fee than a smaller two-bedroom townhouse.
Jewelry appraisals, which are conducted by a gemologist, also can vary in price. Some gemologists can provide an estimate of the appraisal fee after an initial examination of the jewelry items. If necessary, the gemologist can provide extensive research or analysis as part of the appraisal as well. The research might be needed, for example, to compare a rare watch with similar watches that have been sold on the open market.