Tri-State Appraisals has answers to "Frequently Asked Questions"


	Tri-State Appraisals is always more than happy to answer any inquiries you might have about appraisals or real estate in Logan and Logan County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would need your services?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
After completing the appraisal, how can I have a guarantee that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Logan County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (Top)

An appraisal report is an estimation leading to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus age and physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparison to other similar nearby properties which have recently sold. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a residence. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.

Describe what an appraiser does (Top)

An appraiser forumlates a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers illustate their expert conclusions in appraisal reports.

What are the reasons someone would need your services? (Top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:

To receive a loan.
To reduce your property taxes.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight improperly assessed property taxes.
If you need to take care of an estate.
To provide you an edge when purchasing real estate.
To find a likely property value when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every property.
If you are ever involved in a lawsuit.

If you need a more detailed explanation of the appraisal process, please click here.

How is an appraisal different than a home inspection? (Top)

Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and appliances of a property, from the top to the bottom. The usual house 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.

My agent performed a CMA for me. Is that the same as an appraisal? (Top)

To be honest, they share nothing in common. The CMA depends on indistinct local market trends. Appraisals use comparable sales which are valid resources. Area and building values are also precedent in an appraisal. All a CMA does is generate 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 true grasp of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.

What does the appraisal report contain? (Top)

The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:

The client 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 appraisal.
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
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 used when completing the assignment.

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

After completing the appraisal, how can I have a guarantee that the final number is trustworthy? (Top)

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

That the information analysis implemented in the appraisal was appropriate.

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

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

That a trustworthy, defensible appraisal report was conferred.

To become a state licensed appraiser, there are education requirements as well as practical experience that must be attained - all with the end goal of being able to render unbiased value opinions. Likewise, appraisers must obey a meticulous industry code of ethics and respect 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) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and real world experience. Once licensed, he/she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers? (Top)

Mortgage lenders are an appraiser's most likely client, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Logan County or other areas? (Top)

Compiling data is one of the primary activities of an appraiser. Data can be categorized 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 received from a numerous places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, 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)

An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. When selling your house, an appraisal assists you in setting the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Tri-State Appraisals is the best way to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Top)

PMI is an acronym for Private Mortgage Insurance. This additional policy takes care of the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than the loan balance. 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.


	Does your monthly house payment have a lineitem for PMI?Call Tri-State Appraisals today at 304-752-7573 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? (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 condition of its features. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any bushes 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:

A plot plan or survey of the house and land (if readily available).
List of personal property to be sold with the building.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

How does an appraiser define "Market Value"? (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 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.

This rule doesn't apply when a home owner engages an appraiser directly. In these situations, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

How can I get the most ROI out of home improvements? (Top)

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.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 weren't far behind, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.