Norman Appraisal Service has answers to "Frequently Asked Questions"


	Norman Appraisal Service is always ready to reply to any questions you might have about appraisals in Hatfield and Montgomery County. Contact us today to learn how we can help solve your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to require a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Upon completion of the report, how can I have assurance that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Montgomery County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

What is an appraisal? (Return to top)

The method of creating an appraisal consists of an estimation which leads to an opinion of value. This opinion or estimate is figured through the use of a formal method that generally uses the three main "common approaches to value". One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach deals with finding comparable houses nearby and finding value based on making a comparison of those homes to the house in question. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to figure 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? (Return to top)

An appraiser produces a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers document their professional investigation in appraisal reports.

What would cause me to require a real estate appraisal? (Return to top)

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

To obtain a loan.
If you would like to lower your property tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To contest high property taxes.
To handle an estate.
To offer you a negotiating tool when purchasing a home.
To determine a likely sales price when selling your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

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

How is an appraisal different than a home inspection? (Return to top)

Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the house from basement to top. Commonly, a home inspection report will explain the amenities and the necessities of the house: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)

Honestly, they have nothing in common. What the CMA depends on are vague trends. An appraisal is based on comparable sales that can be validated by records. Also, the appraisal checks other factors like condition, location and building costs. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.

What are the contents of an appraisal report? (Return to top)

The main point 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, you'll usually see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
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 value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, 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, permanent equipment installations and even intangible items.
Any 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 when completing the appraisal.

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, how can I have assurance that the value conclusion is legitimate? (Return to top)

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

The appraisal contained an appropriate analysis of the information.

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

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

That a credible, defensible appraisal report was conferred.

To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be attained. Likewise, appraisers must follow a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification takes classroom study, tests and real world experience. Once licensed, he/she must then take 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? (Return to top)

Typically, appraisers are hired by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

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

One of the most important things an appraiser does is to compile data. Data can be described as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is collected from a many sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Appraisers routinely need 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 gathers general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal? (Return to top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home 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? (Return to top)

PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in the event a borrower defaults on the loan and the value of the home is less than what the borrower still owes on 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? Call Norman Appraisal Service today at 2153681094 to see if you can save money by removing your Private Mortgage Insurance premium.

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

We begin 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 status of its features. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:

Information on any written private easements, such as a shared driveway with a neighbor.
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Find copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
A list of "proposed" improvements if the property is to be appraised "as complete".

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."

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 certainly entitled to a copy of the report - it's usually bundled 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 situations, the appraiser may state 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.

How can I get the most ROI out of home improvements? (Return to top)

The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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, something that may not increase your value would be painting just for the sake of redecorating.