Britton Real Estate and Appraisals has answers to "Frequently Asked Questions"


	Britton Real Estate and Appraisals is ready to elaborate on any inquiries you might have about appraisals or real estate in Marshall County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Upon completion of the report, what assurance is there that the final number is legitimate?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Marshall County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
What does "Market Value" mean?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

What is an appraisal? (Go to list of questions)

An appraisal is an inspection allowing the appraiser to come to an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost minus physical deterioration, plus the land value. The Sales Comparison Approach deals with finding comparable properties in the vicinity and figuring out the value based on making a comparison of those homes to the house being appraised. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do? (Go to list of questions)

An appraiser generates a fair and credible determination of market value, often in the context of a real estate exchange. Appraisers reveal the details of their analysis in appraisal reports.

What would cause me to need a real estate appraisal? (Go to list of questions)

There are many reasons to purchase an appraisal from Britton Real Estate and Appraisals with the most common reason being real estate and mortgage transactions. Other reasons for getting an report include:

If you are applying for a loan.
To lower your tax burden.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To fight inflated property taxes.
If you need to take care of an estate.
To provide you an edge when purchasing a home.
To determine a reasonable property value when putting your home on the market.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS need an appraisal on every home.
If you ever find yourself in a civil case.

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

How is an appraisal different than a home inspection? (Go to list of questions)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The standard house inspector's report will contain an evaluation of the condition of the home'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.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Go to list of questions)

Simply put, it's like comparing sugar and saccharin. What the CMA relies upon are ill-defined trends. The appraisal depends on similar definite comparable sales. Location and construction prices are also a priority in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career 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 fee for assignments, regardless of their outcome.

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

Every appraisal should reflect a credible value opinion and should clearly state the following:

The client and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Pertinent property attributes, including: location, physical description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, 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.
What was included in the process of completing the job.

For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what assurance is there that the final number is legitimate? (Go to list of questions)

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

That the information analysis implemented in the appraisal was appropriate.

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

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

The final appraisal report was transparent, sound and not easily discredited.

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

(Go to list of questions) Licensing and certification is achieved through classroom study, tests and real world experience. Once an appraiser is licensed, he or she is required to 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? (Go to list of questions)

Typically, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does an appraiser get the data used to estimate values in Marshall County or other areas? (Go to list of questions)

Collecting information is one of the primary functions of an appraiser. Data can be split into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a numerous sources. To look up recent sales to be used as "comps", we typically 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, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

How can a licensed appraiser help me? (Go to list of questions)

An appraisal is a valuable tool anytime your home's value is relevant to a 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. When buying, be sure you're not overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (Go to list of questions)

PMI stands for Private Mortgage Insurance. It covers the lender if a borrower defaults on the loan and the market price of the home is lower than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The savings from cancelling your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than Britton Real Estate and Appraisals when it comes to analyzing real estate appreciation in Britton and Marshall County. Contact us today.

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

The first step in most appraisals is the home inspection. 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 features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

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

Any records on the purchase of the property for the last three years.
List of personal property to be sold with the home.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

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

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."

Who actually owns the appraisal report? (Go to list of questions)

For mortgage transactions, the lender requests 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 scenarios, the appraiser may stipulate the purpose of the appraisal; 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)

This really depends on where the home is. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

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, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.