Appraisal Services Ltd has answers to "Frequently Asked Questions"


	Appraisal Services Ltd is always ready to reply to any inquiries you might have about appraisals or real estate in La Grange and Fayette County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to need your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
After completing the appraisal, what assurance is there that the value indicated is trustworthy?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Fayette County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Who actually owns the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (Back to top)

The process of performing an appraisal report consists of an investigation which forms an opinion of value. The appraiser will use a several "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves discerning what the improvements would cost without physical depreciation, plus the land value. The Sales Comparison Approach involves searching for comparable houses in close proximity and discovering the value based on comparing those prior sales to the house being appraised. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

Describe what an appraiser does (Back to top)

An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers summarize their expert analysis in appraisal reports.

What would cause me to need your services? (Back to top)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:

To get a loan.
To reduce your property taxes.
To demonstrate a homeowner's acquired equity and remove PMI.
To fight inflated property taxes.
To handle an estate.
To provide you an edge when purchasing real estate.
To determine a likely sales price when listing your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

For a more extensive explanation of the appraisal process click here.

How is an appraiser different than a home inspector? (Back to top)

The appraiser is not a home inspector nor does he/she do a full home inspection. The purpose of a home inspection is to investigate the structure of the house from foundation to attic. Usually, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Back to top)

Honestly, they share nothing in common. What the CMA relies upon are ill-defined trends. An appraisal utilizes comparable sales that can be proven by records. Location and construction costs are also important in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made their livelihood on valuing homes in and around Fayette County is behind the appraisal. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What can I expect to see in my appraisal report? (Back to top)

Each appraisal must reflect a supported estimate of value and must document the following:

The client and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Relevant property attributes, including: location, physical description, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered to complete the assignment.

For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what assurance is there that the value indicated is trustworthy? (Back to top)

In the documentation of an appraisal, each appraiser must make sure of the following:

The appraisal used an appropriate analysis of the data.

That substantial errors of omission or commission were not committed individually or collectively.

That appraisal services were not rendered in a careless or negligent fashion.

The final appraisal report was clear, credible and conclusive.

To become a state licensed appraiser, there are intense education requirements as well as on the jobexperience that must be logged - all with the end goal of being able to provide unbiased value opinions. Plus, appraisers must obey a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers? (Back to top)

Mortgage lenders are an appraiser's typical customer, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Fayette County or other areas? (Back to top)

One of the most important things an appraiser does is to collect data. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is gathered from a numerous sources. To find out about recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

How can a licensed appraiser help me? (Back to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Back to top)

PMI stands for Private Mortgage Insurance. PMI takes care of the lender in case a borrower is unable to pay on the loan and the market price of the home is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Did you have less than 20% to put down on your mortgage? Call Appraisal Services Ltd today at (979) 968-9777. You may be able to get rid of your Private Mortgage Insurance premium.

Does the appraiser need anything from the homeowner in advance? (Back to top)

We begin with an inspection of the property. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its amenities. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:

A survey or plot map of the property and building (if readily available).
Title policy that describes encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
Most recent real estate tax bill and or legal description of the property.

What is "Market Value?" (Back to top)

In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Who actually owns the appraisal report? (Back to top)

In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (Back to top)

This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

As a rule, the most value returned from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms were second, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.