Real Estate Appraisal Source has answers to "Top 18 of the most Frequently Asked Questions"


	Real Estate Appraisal Source is always willing to answer any concerns you might have about appraisals in Rock Island, Henry, Mercer, Whiteside, Scott, Clinton, Muscatine, and Cedar Counties. Contact us today to see how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
Why would I require services from Real Estate Appraisal Source?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
After completing the report, what guarantee is there that the value indicated is legitimate?
How are appraisers certified?
Who hires an appraiser?
Where does Real Estate Appraisal Source get the data used to estimate values in Rock Island County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Once complete, who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (Top)

The procedure of writing an appraisal report deals with an evaluation which forms an opinion of value. The appraiser will use a few "approaches," typically three, to arrive at the estimation of market value. One of the processes is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves finding comparable houses in the vicinity and discerning value based on making a comparison of those houses to the property being investigated. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.

What does an appraiser do? (Top)

An appraiser provides a fair and credible assessment of market value, often in the context of a real estate purchase. Appraisers document their findings in appraisal reports.

Why would I require services from Real Estate Appraisal Source? (Top)

There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:

To get a loan.
To reduce your tax burden.
To show a homeowner has 30% equity and remove PMI.
To fight inflated property taxes.
To deal with an estate.
To provide you a leg-up when purchasing a home.
To determine the most probable price when selling real estate.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS need an appraisal on every home.
It's possible you could be involved in a lawsuit - an appraisal will help.

If you need more information regarding the appraisal process, please click here.

How is an appraisal different than a home inspection? (Top)

Appraisers do not do perform house inspections and are not home inspectors. The point of a home inspection is to investigate the structure of the property from foundation to rooftop. Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Top)

To be blunt, it's like comparing opera to country. What the CMA relies upon are vague trends. An appraisal is based on comparable sales that can be proven by public record. The appraisal report will also contain area and construction costs. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The person creating the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.

What's in an appraisal report? (Top)

The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:

The client and other intended users.
The intended use of the appraisal.
The appraisal's purpose.
The type of value reported and a definition of that value.
The effective date of the appraiser's opinions and conclusions.
Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
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 while working up the appraisal.

For a more in depth view of what goes into an appraisal report click here: Sample Appraisal Report

After completing the report, what guarantee is there that the value indicated is legitimate? (Top)

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

The appraisal used an appropriate analysis of the information.

Whether individually or collectively, there were no major errors contained in the report, nor any material details left out.

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

The final appraisal report was transparent, sound and not easily discredited.

To become a state licensed appraiser, we must meet intense education and experience requirements that prepare us to formulate an unbiased opinion. Likewise, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

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Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once 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 hires an appraiser? (Top)

Typically, appraisers are called upon by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does Real Estate Appraisal Source get the data used to estimate values in Rock Island, Henry, Whiteside, Mercer, Scott, Clinton, Cedar, and Muscatine Counties or other areas? (Top)

Gathering information is one of the main tasks an appraiser performs. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.

Why do I need a professional appraisal? (Top)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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

PMI is an acronym for Private Mortgage Insurance. PMI covers the lender in case a borrower is unable to pay on the loan and the value of the home is lower than the loan balance. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.


	The money you keep from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Real Estate Appraisal Source when it comes to analyzing real estate appreciation in the Quad Cities or surrounding areas. Contact us today.

Should I do anything in advance of the appraisal appointment (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 status of its features. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

A survey or plot map of the property and building (if available).
Written property agreements, such as a maintenance easement for a shared driveway.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements when the property is being appraised "as complete".

Define "Market Value" (Top)

In real estate appraising, 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."

Once complete, who actually owns the appraisal report? (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 entitled to a copy of the report - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating? (Top)

The answer to this is different depending upon the location of the home. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the best ROI from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.

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