Penfold & Associates Appraisal Service has answers to "Frequently Asked Questions"


	Penfold & Associates Appraisal Service is eager to talk to you about any concerns you might have about appraisals in Antrim County. Contact us today to see how we can help you with your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would request a real estate appraisal?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Once the report has been completed, how can I have certainty that the value indicated is valid?
How are appraisers certified?
Who engages the services of appraisers?
Where does Penfold & Associates Appraisal Service get the information used to estimate values in Antrim 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?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Return to top)

The method of writing an appraisal report consists of an estimation which forms an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical degradation, adding the land value. The Sales Comparison Approach deals with finding comparable homes in close proximity and finding value based on comparing those prior sales to the property in question. Being the most popular approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residence. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

Describe what an appraiser does (Return to top)

An appraiser generates an impartial and well substantiated opinion of market value, in the support of real property transactions. Appraisers demonstrate their investigation in appraisal reports.

What are the reasons I would request a real estate appraisal? (Return to top)

There are a lot of reasons to order an appraisal from Penfold & Associates Appraisal Service with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an report include:

To get a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove PMI.
To contest high property taxes.
To settle an estate.
To give you a leg-up when purchasing real estate.
To figure out a reasonable 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 be involved in a lawsuit - an appraisal will help.

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

Is an appraisal the same as a home inspection? (Return to top)

Home inspectors do not produce an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the house from basement to rooftop. The stereotypical house inspector's report will contain an evaluation of the integrity of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible 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? (Return to top)

To be blunt, it's night and day. What the CMA relies upon are vague trends. The appraisal depends on specific verifiable comparable sales. Area and building costs are also important in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who made a career on valuing real estate in and around Antrim County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report? (Return to top)

Every report must reflect a supported value opinion and must identify 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 value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the valuation, 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 other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered when completing the job.

For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, how can I have certainty that the value indicated is valid? (Return to top)

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

That the information analysis implemented in the appraisal was appropriate.

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

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

The final appraisal report was easy to explain, legitimate and not easily discredited.

To become a state licensed appraiser, there are strenuous education requirements as well as practical experience that must be logged. Likewise, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once licensed, he/she is required to complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Return to top)

Commonly, appraisers are called upon by lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Penfold & Associates Appraisal Service get the information used to estimate values in Antrim County or other areas? (Return to top)

Compiling data is one of the primary functions 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 specific data are gathered by the appraiser while on site.

General data is collected from a number of places. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we look at items in the assessor's office 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 servers.

And last but not least, 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? (Return to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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. Simply put, a home 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? (Return to top)

PMI is short for for Private Mortgage Insurance. This supplemental policy takes care of the lender if a borrower defaults on the loan and the value of the house is less than what is owed on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.


	Is PMI a lineitem in your monthly house payment?Call Penfold & Associates Appraisal Service today at 2315993231 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? (Return to top)

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. Inside, pick up any clutter and make sure we can get 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.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Records on the latest purchase of the property in the last three years.
Written property agreements, such as a maintenance agreement for a shared driveway.
Most recent real estate tax bill and or legal description of the property.
Brag sheet that lists 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).
Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

What does "Market Value" mean? (Return to 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? (Return to top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 entitled to a copy of the report - 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.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

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

The added value of a particular amenity truly depends on the local 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.

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, 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.