The Appraisal Company has answers to "Frequently Asked Questions"

The Appraisal Company is eager to address any inquiries you might have about appraisals in Sullivan County. Contact us today to learn how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone request your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Once the appraisal is done, what assurance is there that the final number is valid?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does The Appraisal Company get the information used to estimate values in Sullivan County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (See list of FAQ's)

An appraiser performs an evaluation that produces an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to come to the estimation of market value. One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value. The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which deals with figuring a comparison to comparable houses nearby. The Sales Comparison Approach is normally the most accurate and clearest indicator of value for a house. One of the least common approaches in appraising homes is the Income Approach, which is mainly 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?   (See list of FAQ's)

An appraiser forumlates an unbiased and well justified determination of market value, often in the context of a real estate exchange. Appraisers reveal the details of their professional findings in appraisal reports.


Why would someone request your services?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To challenge high property taxes.
  • To handle an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To find a likely property value when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraiser different than a home inspector?   (See list of FAQ's)

Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to evaluate the structure of the home from foundation to attic. Usually, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, 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 other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Honestly, they share nothing in common. The CMA uses market trends to conduct most of their business. The appraisal relies on specific valid comparable sales. In addition, the appraisal looks at other factors like condition, neighborhood and replacement costs. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents produce 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 independent party, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.

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

Each appraisal should demonstrate a believable 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.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible items.
  • 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 process of completing the assignment.
For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal is done, what assurance is there that the final number is valid?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • That the information analysis contained in the appraisal was appropriate.

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

  • That appraisal services were not conducted in a careless or negligent manner.

  • That a solid, defensible appraisal report was imparted.
To become a state licensed appraiser, there are education requirements as well as practical experience that must be logged. In addition, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating 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 of Real Estate Appraisers are different from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she must then take continuing education courses in order to keep the license current. 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, needing their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does The Appraisal Company get the information used to estimate values in Sullivan County or other areas?   (See list of FAQ's)

Collecting information is one of the primary occupations of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is received from a number of sources. To research recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assembles general data from his or her past experience in 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 worthwhile whenever your home's value is relevant to some financial decision. For those selling a home, you'll want to figure out 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. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from The Appraisal Company is the best documentation to ensure assets are split up fairly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. PMI protects the lender in case a borrower doesn't pay on the loan and the value of the house is less 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.

Is PMI a part of your monthly house payment?Call The Appraisal Company today at 423.354.0216 or send us an e-mail. Documentation of your home's present value could save you thousands.

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, we 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, make sure it is clutter free and that we can access 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.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Information on the latest purchase of the property in the last three years.
  • 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.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

Define "Market Value"   (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."

Does the appraisal belong to the bank or the consumer?   (See list of FAQ's)

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 appraisal - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

I want to get more for my house. Where should I spend money renovating?   (See list of FAQ's)

The answer to this is different depending upon the location of the home. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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, returning 85%. Adding bedrooms and baths can also help 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.