The Real Estate Shop has answers to "Frequently Asked Questions"


	The Real Estate Shop is always ready to elaborate on any questions you might have about appraisals in Hillsborough and Orange County. Contact The Real Estate Shop today to talk about how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would someone need a real estate 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 assurance that the final number is legitimate?
What goes into an appraiser's certification?
Who do appraisers work for?
Where does The Real Estate Shop get the data used to estimate values in Orange County or other areas?
How can a licensed appraiser help me?
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 is "Market Value?"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

What is an appraisal? (List of questions)

The appraisal process is an evaluation that produces an opinion of value. The appraiser must use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the methods that appraisers use to find value; it involves finding what the improvements would cost without physical depreciation, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns making a comparison to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a house. The third approach is the Income Approach, which is of most importance 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 (List of questions)

An appraiser offers a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers summarize their professional findings in appraisal reports.

Why would someone need a real estate appraisal? (List of questions)

There are many reasons to obtain an appraisal from The Real Estate Shop with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:

If you are applying for a loan.
If you would like to lower your property tax obligations.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To challenge inflated property taxes.
If you need to settle an estate.
To offer you an edge when purchasing a home.
To determine the most probable price when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
If you ever find yourself in a civil case.

Click here for a more detailed explanation of the process involved in getting an appraisal.

What is the difference between an appraisal and a home inspection? (List of questions)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party evaluation of the available structure and electrical and mechanical systems of a home, from the top to the foundation. Commonly, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Frankly, it's like comparing Shakespeare to reality TV. What the CMA depends on are vague trends. Appraisals use similar sales which are valid resources. The appraisal report will also contain area and construction values. 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 the person creating 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. A certified, North Carolina licensed professional who has formed a career on valuing homes in and around Orange County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the value of the home.

What does the appraisal report contain? (List of questions)

Every appraisal should indicate a believable value opinion and should clearly state the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the appraisal.
The type of value reported and a definition of that value.
The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
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 considered to complete the job.

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

Upon completion of the report, how can I have assurance that the final number is legitimate? (List of questions)

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

That the information analysis contained in the appraisal was suitable.

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

That appraisal services were provided in a careful and judicious manner.

The final appraisal report was transparent, sound and conclusive.

There are intense classroom and real world experience requirements that must be fulfilled in order to become a licensed appraiser in North Carolina. In addition, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she must then complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who do appraisers work for? (List of questions)

Mortgage lenders are an appraiser's typical customer, using their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does The Real Estate Shop get the data used to estimate values in Orange County or other areas? (List of questions)

Collecting information is one of the main tasks an appraiser engages in. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.

How can a licensed appraiser help me? (List of questions)

An appraisal is a valuable tool anytime the value of your home is relevant to a financial decision. If you're selling your house, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from The Real Estate Shop is the best way to ensure assets are split up fairly. Simply put, a house 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? (List of questions)

PMI is short for for Private Mortgage Insurance. This supplementary policy takes care of the lender in case a borrower is unable to pay on the loan and the value of the home is lower than the loan balance. 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.


	The savings from dropping your PMI pays for the appraisal in a matter of months. The Real Estate Shop stays current with value trends in Hillsborough and Orange County. Contact us today.

How do I get ready for the appraiser? (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 condition of its amenities. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

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.
Title policy that lists encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

What is "Market Value?" (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."

Does the appraisal belong to the bank or the consumer? (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 bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. 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 use the appraisal for any purpose.

Are some home improvements more worthwhile than others? (List of questions)

The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.