Browne Appraisal, Inc. has answers to "Frequently Asked Questions"

Browne Appraisal, Inc. is eager to answer any concerns you might have about appraisals in Panama City and Bay County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would a person need a home appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an Appraisal and a Comparative Market Analysis (CMA)?
What does the appraisal report contain?
Upon completion of the report, how can I have confidence that the value indicated is veritable
How are appraisers certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate value?
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?
What is "Market Value?"
Who Actually Owns the Appraisal Report?
Which home renovations add the most to the price?

What is an appraisal? (Back to top)

An appraiser performs an estimation that produces an opinion of value. There are three "common approaches to value" which assists the real estate appraiser arrive at this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the house, less the age and physical dilapdiation, adding the land value. The Sales Comparison Approach involves searching for comparable homes nearby and discovering the value based on making a comparison of those homes to the home being appraised. The Sales Comparison Approach is normally the most definitive and best indicator of worth for a house. The Income Approach is mainly used for figuring out the cost of income-producing properties based on what an investor would pay based on the amount of income a property would bring in. If you need more information about the appraisal process, please click here: What is an appraisal?

What does an appraiser do? (Back to top)

An appraiser provides a professional, unbiased opinion of market value, to be used in making real estate sales. A complete analysis is presented by the appraiser in a report.

Why would a person order a real estate appraisal? (Back to top)

There are a lot of reasons to obtain an appraisal from Browne Appraisal, Inc. with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:

If you are applying for a loan.

To reduce your tax burden.

To show the replacement cost of PMI.

To fight inflated property taxes.

If you need to take care of an estate.

To offer you a negotiating tool when purchasing real estate.

To find an honest price when selling real estate.

To protect your rights in a condemnation case.

Because an official agency such as the IRS requires it.

It's possible you could be involved in a lawsuit - an appraisal will definitely help.

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

What is the difference between an appraisal and a home inspection? (Back to top)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the property, from the roof to the bottom. The usual property inspector's report will contain an evaluation of the integrity of the property'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.

What is the difference between an Appraisal and a Comparative Market Analysis (CMA)? (Back to top)

Simply put, it's apples and oranges. The CMA relies on indistinct local market trends. Appraisals use similar sales which are valid resources. The appraisal report will also include area and building values. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is who's doing the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who has formed their livlihood on valuing real estate in and around Bay County is behind the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, whose income is tied to the value of the home.

What does the appraisal report contain? (Back to top)

Every appraisal must demonstrate a credible value opinion and must identify the following:

The client and who's purposes the appraisal is to serve.
The intended use of the report.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Relevant property characteristics, including: location, physical description, legal attributes, economic factors, 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 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 used to complete the assignment.

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

Once the assignment has been delivered, how can I have assurance that the value indicated is trustworthy? (Back to top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:

The appraisal contained an apropos analysis of the information.

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

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

The final appraisal report was clear, sound and defensible.

To become a state licensed appraiser, we must fulfill extensive education and experience requirements that give us the background to produce an unbiased opinion. Likewise, appraisers must obey a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

How are appraisers certified? (Back to top)

Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who do appraisers work for? (Back to top)

Mortage lenders are an appraiser's most likely client, using their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate value? (Back to top)

Gathering data is one of the primary roles of an appraiser. Data can be divided into Specific and General. Specific data is gathered from the home itself. Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product. And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.

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

Anytime the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal helps you set the most appropriate value. 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. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can the right financial decisions.

What exactly is PMI and how can I get rid of it? (Back to top)

PMI stands for Private Mortgage Insurance. It insures a lender against loss on homes purchased with a down-payment of less than 20%. Once equity in the home reaches 20% you can eliminate the PMI and start saving immediately. For a detailed discussion of PMI and how to get rid of it click here: What is PMI and how to get rid of it

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

The first step in most appraisals is the home inspection. During this process, the appraiser 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house. Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure that the appraiser can easily access items like furnaces and water heaters.

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

A survey of the house and property.

A deed or title report showing the legal description.

A recent tax bill.

A list of personal property to be sold with the house if applicable.

A copy of the original plans.

What is "Market Value?" (Back to top)

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? (Back to top)

In most real estate transactions, the appraisal is ordered by the lender. While the home 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 home buyer is entitled to a copy of the report - it's usually included with all of 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 engages an appraiser directly. 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 stipulated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (Back to top)

The answer to this is different depending upon the location of the home. Different markets value amenities differently. Adding a central air conditioner in Houston, Texas may add significant value, while putting one in a home located in Buffalo, New York might not have much impact.

As a rule, the most value returned 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 were second, returning 85%.