Appraisal Review & Reports has answers to "Frequently Asked Questions"


	Appraisal Review & Reports is always ready to address any inquiries you might have about appraisals in Johnson City and Washington County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would I request services from Appraisal Review & Reports?
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?
Upon completion of the report, what guarantee is there that the final number is accurate?
How are appraisers certified?
Who hires Appraisal Review & Reports
Where does Appraisal Review & Reports get the data used to estimate values in Washington County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
What does "Market Value" mean?
Who has rights to the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (Go to list of questions)

An appraiser provides an evaluation that produces an opinion of value. The appraiser will use a several "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the property, minus age and physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar homes nearby and finding value based on comparing those properties to the house in question. The Sales Comparison Approach is commonly the most definitive and clearest indicator of a liklely sales price for a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

Describe what an appraiser does (Go to list of questions)

An appraiser produces an impartial and well justified opinion of market value, to be used in making real estate transactions. Appraisers show their expert analysis in appraisal reports.

Why would I request services from Appraisal Review & Reports? (Go to list of questions)

There are many reasons to order an appraisal from Appraisal Review & Reports with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:

If you are applying for a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight high property taxes.
To handle an estate.
To offer you a negotiating tool when purchasing a home.
To figure out a likely price when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every property.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

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

How is an appraisal different than a home inspection? (Go to list of questions)

Appraisers do not do perform home inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the property from foundation to rooftop. Commonly, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, 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? (Go to list of questions)

To be blunt, it's like comparing opera to country. What the CMA depends on are vague trends. An appraisal relies on comparable sales that can be validated by records. Area and construction values are also precedent in an appraisal. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

Who's behind the report is frankly the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - 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? (Go to list of questions)

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

The client and other intended users.
How the appraisal is supposed to be used.
The purpose of the appraisal.
The type of value reported and a definition of the value reported.
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 real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible considerations.
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.
What was entailed in the activity of completing the job.

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

Upon completion of the report, what guarantee is there that the final number is accurate? (Go to list of questions)

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

The appraisal used analysis of the information.

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

That appraisal services were provided in a careful and judicious manner.

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

There are rigorous education and real world experience requirements that must be adhered to in order to get an appraisal license in Tennessee. Likewise, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions)

Regulations regarding licensing and certification are different from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he/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 Appraisal Review & Reports (Go to list of questions)

Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Appraisal Review & Reports get the data used to estimate values in Washington County or other areas? (Go to list of questions)

Compiling data is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is collected from a number of places. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers often have to report when a property lies 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 assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

Why should I hire a licensed appraiser? (Go to list of questions)

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 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 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.

What exactly is PMI and how can I get rid of it? (Go to list of questions)

PMI is an acronym for Private Mortgage Insurance. This added plan guards the lender if a borrower doesn't pay on the loan and the value of the house is lower 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? Contact Appraisal Review & Reports today at 423-794-0145. You may be able to cancel your Private Mortgage Insurance payment.

Do you need anything from the homeowner in advance? (Go to list of questions)

The first step in most appraisals is the home 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. On the home's interior, pick up any clutter and make sure we can find our way to 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.

To help speed things along plus ensure a more accurate report, try if possible to have the following items:

A survey or plot map of the property and building (if readily available).
Written property agreements, such as a maintenance easement for a shared driveway.
Title policy that describes encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

What does "Market Value" mean? (Go to list of questions)

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 has rights to the appraisal report? (Go to list of questions)

For mortgage transactions, the lender orders 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (Go to list of questions)

It really depends on the market. 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 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, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.