Holliday Prescott Appraisals has answers to "Frequently Asked Questions"


	Holliday Prescott Appraisals is always eager to answer any inquiries you might have about appraisals in Elmore County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons someone would need your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
After completing the report, what guarantee is there that the value indicated is valid?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Elmore County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Return to top)

The process of writing an appraisal consists of an investigation which forms an opinion of value. This opinion or estimate is found through the use of a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the processes that appraisers use to find value; it involves discerning what the improvements would cost minus physical depreciation, plus the land value. The Sales Comparison Approach deals with searching for similar properties in close proximity and figuring out the value based on making a comparison of those homes to the property being appraised. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the capital produced by the property.

Describe what an appraiser does (Return to top)

An appraiser generates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers illustate their professional analysis in appraisal reports.

What are the reasons someone would need your services? (Return to top)

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

To obtain a loan.
If you would like to lower your property tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight inflated property taxes.
If you need to settle an estate.
To give you an edge when purchasing a home.
To determine the most probable property value when putting your home on the market.
To protect 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 property.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

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

The appraiser is not a home inspector and does not do a full home inspection. An inspection is a third-party investigation of the available structure and appliances of a property, from the roof to the foundation. The usual house inspector's report will contain an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

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

To be blunt, it's like comparing sugar and saccharin. The CMA uses market trends to create most of their business. An appraisal utilizes comparable sales that can be validated by public record. Area and architectural values are also precedent 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 credentials of the person creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no vested interest in the value conclusion, unlike the real estate agent, whose income is tied to the price of the home.

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

Every appraisal must reflect a supported estimate of value and should identify the following:

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The purpose of the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.(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 characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, 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.
What was involved in the process of completing the assignment.

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

After completing the report, what guarantee is there that the value indicated is valid? (Return to top)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

The appraisal contained analysis of the information.

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

That appraisal services were done in a careful and cognizant fashion.

That a believable, defensible appraisal report was imparted.

To become a state licensed appraiser, there are education requirements as well as practical experience that must be logged - all with the end goal of gaining the skills required to provide unbiased value opinions. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Return to top)

Most of the time, appraisers are employed by lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Elmore County or other areas? (Return to top)

Compiling data is one of the main tasks an appraiser does. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often have 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 last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.

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

An appraisal is a worthwhile whenever the value of your home is relevant to a financial decision. For those selling a home, you'll want to figure out 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, you can avoid overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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. It guards the lender in case a borrower is unable to pay on the loan and the value of the property is less 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.


	Does your monthly loan payment include a fee for PMI?Call Holliday Prescott Appraisals today at 334-567-0995 or send us an e-mail. A current appraisal could save you thousands.

Should I do anything in advance of the appraisal inspection (Return to top)

The first step in most appraisals is the property inspection. During this process, the appraiser 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 the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to 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:

Information on any written private agreements, such as a shared driveway with a neighbor.
A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
Information on "Homeowners Associations" or condominium covenants and fees.
Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A bill for your most recent real estate taxes which should also contain a legal description of the property.

How does an appraiser define "Market Value"? (Return to 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? (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the appraisal - 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 engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others? (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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.

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, yielding 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 atypical for your neighborhood in terms of size.