Allen Real Estate Appraisal has answers to "Frequently Asked Questions"


	Allen Real Estate Appraisal is always ready to handle any questions you might have about appraisals in Fayette County. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
Why would a person require services from Allen Real Estate Appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Upon completion of the report, what guarantee is there that the value conclusion is accurate?
How hard is it to become certified?
Who do appraisers work for?
Where does Allen Real Estate Appraisal get the information used to estimate values in Fayette County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

Describe an appraisal (Top)

The process of performing an appraisal consists of an evaluation which leads to an opinion of value. The appraiser must use a number of "approaches," typically three, to come to the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, minus age and physical deterioration, adding the land value. Another of the approaches is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a house. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to find the value of a property based on what an investor would pay based on the income produced by the property.

What does an appraiser do? (Top)

An appraiser produces a fair and credible assessment of market value, often in the context of a real estate purchase. Appraisers illustate their expert conclusions in appraisal reports.

Why would a person require services from Allen Real Estate Appraisal? (Top)

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an report include:

To obtain a loan.
If you would like to reduce your property tax obligations.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To fight improperly assessed property taxes.
If you need to settle an estate.
To provide you a leg-up when purchasing a home.
To find an honest 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 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)

Home inspectors do not provide an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the property from foundation to top. The general property inspector's report will contain an evaluation of the condition of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)? (Top)

Honestly, they have nothing in common. The CMA uses market trends to conduct most of their business. The appraisal depends on specific valid comparable sales. Location and construction prices 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.

But the most significant factor is who's behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, Kentucky licensed professional who bases their livelihood on valuing properties in and around Fayette County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.

What's in an appraisal report? (Top)

The main point of an appraisal document 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 reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest 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.
What was included in the activity of completing the job.

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

Upon completion of the report, what guarantee is there that the value conclusion is accurate? (Top)

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

The appraisal used analysis of the data.

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

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

The final appraisal report was transparent, credible and conclusive.

There are intense education and experience requirements that must be met in order to get an appraisal license in Kentucky. Plus, appraisers must follow a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Top) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for? (Top)

Typically, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Allen Real Estate Appraisal get the information used to estimate values in Fayette County or other areas? (Top)

Gathering information is one of the primary roles of an appraiser. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a number of places. To research recent sales to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents. Appraisers often have to report when a property is 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 gathers 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? (Top)

If you're making some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. 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 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.

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

PMI stands for Private Mortgage Insurance. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.


	Has your real estate appreciated since you first purchased? Contact Allen Real Estate Appraisal today at 8595331070. You may be able to get rid of your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment (Top)

We start 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 condition of its amenities. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:

Any information on the purchase of the property for the last three years.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
A list of any major home improvements and enhancements, 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 list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (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."

Does the appraisal belong to the bank or the consumer? (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 certainly entitled to a copy of the report - 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.

The exception to this rule is when a home owner hires an appraiser directly. In these scenarios, the appraiser may define the purpose of the appraisal; 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.

Are some home improvements more worthwhile than others? (Top)

The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe move. 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%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.