BOB'S APPRAISAL SERVICE has answers to "Frequently Asked Questions"


	BOB'S APPRAISAL SERVICE is eager to elaborate on any questions you might have about appraisals or real estate in Shelby County. Contact BOB'S APPRAISAL SERVICE today to learn how we can help you with your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
After completing the report, what guarantee is there that the value conclusion is accurate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Shelby 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?
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

What is an appraisal? (See list of FAQ's)

The appraisal process is an estimation that generates an opinion of value. This opinion or estimate is discerned by a formal method that usually uses the three main "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find value; it involves figuring what the improvements would cost less physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (See list of FAQ's)

An appraiser produces a fair and credible assessment of market value, in the support of real estate transactions. Appraisers demonstrate their investigation in appraisal reports.

What would cause me to need a real estate appraisal? (See list of FAQ's)

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

To get a loan.
If you would like to lower your property tax burden.
To show a homeowner has 30% equity and remove PMI.
To challenge high property taxes.
If you need to settle an estate.
To offer you a leg-up when purchasing real estate.
To determine an honest price when listing your home.
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 require an appraisal on every home.
If you are ever involved in a lawsuit.

Click here for a more detailed explanation of the process of getting an appraisal.

What is the difference between an appraisal and a home inspection? (See list of FAQ's)

Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a property, from the top to the bottom. The general property inspector's report will include an evaluation of the integrity of the property'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.

Is an appraisal the same as a comparative market analysis(CMA)? (See list of FAQ's)

To be blunt, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to generate most of their business. Appraisals use similar sales which are verifiable resources. Location and building prices 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 frankly the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce by a licensed, certified professional who makes a living 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 flat sum for assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report? (See list of FAQ's)

Each appraisal must reflect a credible value opinion and must clearly state the following:

The client and other intended users.
The intended use of the appraisal.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, 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 the like.
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 comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, what guarantee is there that the value conclusion is accurate? (See list of FAQ's)

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

That the information analysis utilized in the appraisal was proper.

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

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

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

To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to formulate an unbiased opinion. Likewise, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(See list of FAQ's) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and real world experience. Once licensed, he/she is required to take continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers? (See list of FAQ's)

Mortgage lenders are an appraiser's typical customer, requiring their services to ensure a home involved in a mortgage transaction is adequate collateral for a 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 Shelby County or other areas? (See list of FAQ's)

Gathering data is one of the main things 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 specifics are gathered by the appraiser during an inspection.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To double-check actual sales prices, we use 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, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

What can a full appraisal do for me? (See list of FAQ's)

An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. If you're selling your house, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from BOB'S APPRAISAL SERVICE is the best documentation to ensure assets are divided evenly. A home 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? (See list of FAQ's)

PMI is short for for Private Mortgage Insurance. This supplemental plan protects the lender in case a borrower doesn't pay on the loan and the market price of the home is less than what is owed on the loan. 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.


	Did you secure your mortgage with less than 20% down? Contact BOB'S APPRAISAL SERVICE today at 901-309-3747 to see if you can get rid of your Private Mortgage Insurance premium.

How do I get ready for the appraiser? (See list of FAQ's)

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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access items 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:

A plot plan or survey of the house and land (if readily available).
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems 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".

What does "Market Value" mean? (See list of FAQ's)

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? (See list of FAQ's)

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 appraisal - it's usually included 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 engaging 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 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? (See list of FAQ's)

It really depends on the market. 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 best ROI 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 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.