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    Define the term “Appraisal”

    What does an appraiser do?

    What are the reasons a person would need services from Home Appraisals, Inc.?

    What is the difference between an appraisal and a home inspection?

    What is the difference between an appraisal and a comparative market analysis (CMA)?

    What’s in an appraisal report?

    Once the assignment has been completed, how can I have assurance that the value conclusion is trustworthy?

    How difficult is it to become certified?

    Who are an appraiser’s customers?

    Where does an appraiser get the data used to estimate values in Miami-Dade County or other areas?

    What can a full appraisal do for me?

    What exactly is PMI and how can I get rid of it?

    How do I get ready for the appraiser?

    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?

    Define the term “Appraisal”   (Return to top)

    An appraiser performs an evaluation that produces an opinion of value.

    There are three “common approaches to value” which helps the appraiser arrive at this opinion or valuation.

    The Cost Approach is one of the methods that real estate appraisers use to find the value of a home; it involves finding what the improvements would cost minus physical deterioration, adding the land value.

    Easily the most common approach in finding the value of a home is the Sales Comparison Approach which concerns concluding a comparison to comparable homes nearby.

    Being the most popular approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a home.

    The Income Approach is primarily 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 produce.

    What does an appraiser do?   (Return to top)

    An appraiser forumlates a fair and credible opinion of market value, in the support of real property transactions. Appraisers present their conclusions in appraisal reports.

    What are the reasons a person would need services from Home Appraisals, Inc.?   (Return to top)

    There are a lot of reasons to obtain an appraisal from Home Appraisals, Inc. with the most common reason being real estate and mortgage transactions.

    A few other reasons for getting an appraisal include:

    • To get a loan.
    • To lower your tax burden.
    • To help a homeowner realize if they owe less than 80% of their home’s value and remove PMI.
    • To fight high property taxes.
    • If you need to settle an estate.
    • To offer you an edge when purchasing a home.
    • To determine a reasonable price when selling real estate.
    • To ensure parties are provided just compensation in eminient domain cases.
    • Government agencies such as the IRS require an appraisal on every home.
    • If you are ever involved in a civil case.

    What is the difference between an appraisal and a home inspection?   (Return to top)

    Home inspectors do not produce an opinion of value and do not use the same forms as appraisers.

    An inspection is a third-party investigation of the accessible structure and systems of a house, from the top to the foundation.

    For the most part, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, 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.

    What is the difference between an appraisal and a comparative market analysis (CMA)?   (Return to top)

    All a CMA does is generate a “ball park figure.”

    An appraisal delivers a carefully documented opinion of value.

    But the largest difference is who’s creating the report.

    Real estate agents produce CMA’s, and they don’t always know the whole market or have specific competence when it comes to home valuation.

    A certified, licensed professional who made their livelihood on valuing properties is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property’s selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for assignments, regardless of their outcome.

    What’s in an appraisal report?   (Return to top)

    The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:

    • Who engaged the appraiser and whose purposes the appraisal is to serve.
    • The intended use of the report.
    • The purpose of the appraisal.
    • Precisely what “value” attribute is being reported and what that value means.
    • The effective date of the appraiser’s opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
    • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible factors.
    • All 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 used while working up the assignment.

    Once the assignment has been completed, how can I have assurance that the value conclusion is trustworthy?   (Return to top)

    In communicating an appraisal report, each appraiser must ensure the following:

      • That the information analysis contained in the appraisal was appropriate.
      • That major errors of omission or commission were not committed individually or collectively.
      • That appraisal services were not rendered in a careless or negligent fashion.
      • That a credible, defensible appraisal report was communicated.

    To become a state Certified appraiser, there are strenuous education requirements as well as on the job experience that must be logged – all with the objective of gaining the skills required to render unbiased value opinions.

    Plus, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

       (Return to top)

    Licensing and certification is achieved through coursework, tests and experience working under a supervisory appraiser. Once licensed, he/she is required to complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state
    click here.

    Who are an appraiser’s customers?   (Return to top)

    Most of the time, appraisers are called upon by Banks to render a value opinion on real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters, Divorce, Estate Settlement, Tax Appeal, Insurance Replacement Cost and investment decisions.

    Where does an appraiser get the data used to estimate values?   (Return to top)

    Gathering data is one of the primary activities of an appraiser.
    Data can be divided into Specific or General.

    Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

    General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To verify actual sales prices, we use tax records and other public documents.

    Flood zone data is retrieved from FEMA data outlets, such as a la mode’s InterFlood product.

    And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other Real Estate in the same market area.

    What can a full appraisal do for me?   (Return to top)

    Any time the value of your real estate is being used to make a significant financial decision, an appraisal helps.

    For those selling a home, you’ll want to determine the price that gets you the most profit but doesn’t leave your home on the market too long; an appraisal can help with that.

    When buying, be sure you’re not overpaying by commissioning an independent appraiser.

    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. Knowing its true value means you can make the right financial decisions.

    What exactly is PMI and how can I get rid of it?   (Return to top)

    PMI is the common abbreviation for for Private Mortgage Insurance.
    This added policy covers the lender in the event a borrower is unable to pay on the loan and the value of the home is less than the loan balance. You can have your PMI dropped once you’ve achieved 20% equity in your home through appreciation and principal payments.

    How do I get ready for the appraiser?   (Return to top)

    We start with an inspection of the home.

    During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home’s general condition, and take several photos of your house for inclusion in the report.

    The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren’t locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.

    To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:

    • Any information on the purchase of the property for the last three years.
    • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
    • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
    • A copy of the current listing agreement and broker’s data sheet and Purchase Agreement if a sale is “pending”.
    • A list of “proposed” improvements if the property is to be appraised “as complete”.

    Define “Market Value”   (Return 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.”

    Once complete, who actually owns the appraisal report?   (Return to top)

    For mortgage transactions, the lender requests the appraisal, either directly or through a third party.

    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.

    It’s different when it’s the homeowner hiring the appraiser for things outside securing a mortgage.

    In these situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax appeal, for example. If not noted 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?   (Return to top)

    This really depends on where the home is.

    For example, if you live in a cold region, insulated windows can be a real plus. But they aren’t as attractive in a warm-weather climate.

    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 were second, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.

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