Richardson Realty & Appraisal LLC has answers to "Frequently Asked Questions"


	Richardson Realty & Appraisal LLC is happy to reply to any concerns you might have about appraisals or real estate in Lamar County. Feel free to contact us today.

Describe an appraisal
What does an appraiser do?
What are the reasons someone would need a real estate appraisal?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the report, what guarantee is there that the value indicated is valid?
How are appraisers certified?
Who do appraisers work for?
Where does Richardson Realty & Appraisal LLC get the information used to estimate values in Lamar 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 inspection
What is "Market Value?"
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

Describe an appraisal (Go to list of questions)

The method of performing an appraisal report deals with an estimation which forms an opinion of value. This opinion or estimate is found through the use of a formal method that commonly utilizes the three main "common approaches to value". One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, less the age and physical dilapidation, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves finding a comparison to other similar nearby properties which have recently sold. Being the most popular approach, the Sales Comparison Approach is considered the most precise and best indicator of value for a property. One of the least common approaches in appraising houses is the Income Approach, which is generally used to determine 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? (Go to list of questions)

An appraiser offers a professional, unbiased opinion of market value, in the support of real property transactions. Appraisers show their professional conclusions in appraisal reports.

What are the reasons someone would need a real estate appraisal? (Go to list of questions)

There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:

To receive a loan.
To lower your property taxes.
To build a case for a homeowner's equity and remove PMI.
To contest high property taxes.
If you need to take care of an estate.
To give you an edge when purchasing real estate.
To find the most probably sales price when putting your home on the market.
To protect your rights if your property is being taken by means of eminent domainin a condemnation case.
Because an official agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

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

How is an appraiser different than a home inspector? (Go to list of questions)

Home inspectors do not provide an opinion of value and are not appraisers. The purpose of a home inspection is to evaluate the structure of the house from foundation to rooftop. Usually, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)

To be blunt, it's night and day. The CMA depends on indefinite market trends. The appraisal relies on specific valid comparable sales. The appraisal report will also include location and construction values. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is the person behind the report. 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 created 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 whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their outcome.

What's in an appraisal report? (Go to list of questions)

The main point of an appraisal document 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 appraisal's purpose.
The type of value reported and a definition of the value reported.
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 attributes, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
Any 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.
The scope of work considered while working up the assignment.

For a more in depth 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 indicated is valid? (Go to list of questions)

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

The appraisal contained 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.

The final appraisal report was clear, credible and defensible.

To become a state licensed appraiser, there are extensive education requirements as well as experience that must be logged. Plus, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification takes classroom study, tests and practical experience. Once licensed, he/she must then take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who do appraisers work for? (Go to list of questions)

Typically, appraisers are called upon by lenders to render a value opinion on a house involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does Richardson Realty & Appraisal LLC get the information used to estimate values in Lamar County or other areas? (Go to list of questions)

One of the main things an appraiser does is to collect data. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a variety of sources. To look up recently sold homes to be used as "comps", an appraiser often use the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. 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 service.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.

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

Anytime the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.

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. PMI covers the lender in the event a borrower defaults on the loan and the market price of the property is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Is PMI something increasing your monthly house payment? Call Richardson Realty & Appraisal LLC today at 6014082323 or send us an e-mail. Documentation of your home's current worth could save you thousands.

Should I do anything in advance of the appraisal inspection (Go to list of questions)

We start with an inspection of the home. 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 amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and relocate any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can get to items like furnaces and water heaters.

To help expedite our work plus 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).
List of personal property to be sold with the home.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
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).
Information on "Homeowners Associations" or condominium covenants and fees.

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

Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, 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: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) 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? (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 appraisal - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, 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 do whatever they want with the appraisal.

How can I get the most ROI out of home improvements? (Go to list of questions)

The answer to this is different depending upon the location of the home. It really depends on the market. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also boost 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.