Frequently asked questions about home appraisals
What is an appraisal?
The procedure of writing an appraisal consists of an investigation which forms an opinion of value. The appraiser must use a number of "approaches," typically three, to arrive at the estimation of worth. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the house, minus age and physical deterioration, plus the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable houses nearby. The Sales Comparison Approach is normally the most definitive and best indicator of cost for a home. The Income Approach is primarily used for finding the worth of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
What does an appraiser do?
An appraiser offers a professional, unbiased opinion of market value, to be used in making real estate decisions. Appraisers display their formal investigation in appraisal reports.
There are a lot of reasons to purchase an appraisal from Peerless Appraisals with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing a report include:
What is the difference between an appraisal and a home inspection?
Home inspectors do not estimate an opinion of value and are not appraisers. An inspection is a third-party evaluation of the available structure and electrical and mechanical systems of a home, from the roof to the bottom. Usually, a home inspection report will discuss the amenities and the requirements of the house: 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an Appraisal and a Comparative Market Analysis (CMA)?
Simply, they share nothing in common. The CMA relies on local market trends. The appraisal depends on similar verifiable comparable sales. Area and building costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is the person creating 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. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
What does the appraisal report contain?
Each report must reflect a credible estimate of value and must identify the following:
After completing the report, what assurance is there that the value indicated is valid?
In communicating an appraisal report, each appraiser must ensure the following:
Most states require that real estate appraisers are state licensed or certified. The state licensed or certified appraiser is trained to render an unbiased opinion based upon extensive education and experience requirements. To become licensed or certified, appraisers must fulfill rigorous education and experience requirements. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
How are appraisers certified?
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to take continuing education courses in order to keep the license current.
Who do appraisers work for?
Typically, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate value?
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 Metro Appraisals' 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?
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?
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.
How do I get ready for the appraiser?
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:
What is "Market Value?"
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?
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?
Peerless Appraisals, LLC is always willing to address any questions you might have about appraisals in San Antonio and Bexar County. Contact us today to talk about how we can help you with your specific valuation problems.
Assessment appeal services
January 7, 2023 Most localities determine your property tax burden based on an ad valorem assessment of the property's value. If you you get an unwanted surprise in the mail stating your taxes are going up, you may have good reason to differ with their assessment. Sometimes, matters like this can be solved with a phone call. However, if after discussing your assessment with your local taxing authority you still feel your property was overvalued, an independent, third-party appraiser is often your best bet in proving your case. There are as many different procedures for appealing assessments as there are property taxing districts, so it's important to enlist the help of a professional appraisal firm that's experienced and trained in the ins and outs of your particular jurisdiction. Please note: It makes sense to do your own research before determining whether to go forward with a property assessment appeal, especially before you make the decision to hire a professional appraiser. However, according to the Uniform Standards of Professional Appraisal Practice (USPAP), we are not allowed to take "shortcuts" -- i.e., your research -- and use it on its face as part of our independent evaluation. When you hire us for an assessment appeal, you're commissioning an independent, third-party professional appraisal report. As such we do our own evaluation, beginning to end. If you're right that your property has been overvalued, an independent report such as ours will be even more persuasive than any other evidence you can marshal on your own. But it depends on our ability to do the work independently. Sometimes, you will have a hearing on your assessment appeal and will need for the appraiser you've hired to testify on your behalf. Be assured that at Peerless Appraisals, we are able to professionally and persuasively testify at appeal hearings. Browse our website to learn more about our qualifications, expertise and services offered.
Home Appraisal Ethics
January 7, 2023 Appraising is a profession, and appraisers are professionals. The rigors of becoming a licensed appraiser have increased more than ever before. So it goes without question these days that real estate appraisal can certainly be considered a profession rather than a trade. As with any profession we have a strict ethical code. As appraisers our primary responsibility is to their client. Typically, in residential practice, the lender places the order to the appraiser, becoming the appraiser's client. Appraisers are required to only disclose information to their clients, and as a homeowner, if you would like to review an appraisal report, you generally have to get it through your lender. Other responsibilities also include, accurate figures appropriate to the scope of the assignment, attaining and maintaining an appropriate level of competency and education, and the appraiser must conduct him or herself as a professional. Maintaining high ethics is is what we do everyday at Peerless Appraisals. Appraisers may often have fiduciary obligations to third parties, including homeowners, buyers and sellers, or others. Those third parties normally are listed in scope of the appraisal assignment itself. An appraiser's fiduciary roll is restricted to those parties who the appraiser knows, based on the scope of work or other things in the framework of the job. There are also ethical rules that have nothing to do with clients and others. For example, appraisers must store their work files for a minimum of five years - at Peerless Appraisals, LLC you can rest assured that we adhere to that rule. We demand the highest professional integrity possible from ourselves. Working on orders that contingency fees is not something we can consider That is, we are not able to agree to do an appraisal report and get paid only if the loan closes. We don't do assignments on percentage fees. That is perhaps the appraisal industries most important rule, because it would tend to make appraisers raise the value of homes or properties to increase their fee. We set ourselves to a higher standard. Other unethical practices may be established by state law or professional organizations to which an appraiser belongs. The Uniform Standards of Professional Appraisal Practice (USPAP) also states a violation in ethics as the acceptance of an assignment that is contingent on "the reporting of a pre-determined result (e.g., opinion of value)," "a direction in assignment results that favors the cause of the client," "the amount of a value opinion," as well as other situations. We follow these rules to the letter which means you can be assured we are doing everything we can to provide an unbiased determination of the home or property value. With Peerless Appraisals you won't have any doubts that you're receiving 100 percent ethical, professional service.
Understanding common appraisal terms: Everything You need to know
January 7, 2023 Adjustment. When comparable properties have been identified, the appraiser makes adjustments to the Sales Price of each of the comparables to bring them into equivalency with the subject property, accounting for differences in location, construction quality, living area, acreage, frontage, amenities and the like. This is where the professional expertise of an appraiser is most valuable. Chattel . Personal property that may be on the subject property but which does not figure into the opinion of value in the appraisal report. Comparable or "comp". Properties like the subject property nearby which have sold recently, used as a basis to determine the fair market value of the subject property. Drive-by . An appraisal that is limited to an exterior-only examination of the Subject to make a determination that the property is actually there and has no obvious defects or damage visible from the outside. Fannie Mae's form for this type of appraisal is its 2055, so you may hear a drive-by referred to as a "2055." Fair market value . The appraiser's opinion of value as written in his or her appraisal report should reflect the fair market value of the property -- what a willing buyer would pay a willing seller in an arm's-length transaction. GLA. "Gross Living Area," the sum of all above grade floor space, including stairways and closet space. GLA is often determined using exterior wall measurements. Latent defects . A defect on the property that is not readily apparent but which impact the fair market value. Structural damage or termite infestation might be examples. MLS. A Multiple Listing Service is a proprietary listing of all properties on the market in a given area and their listing prices, as well as a record of all recent closed sales and their sales prices. Created by and used primary by real estate agents, many appraisers pay for access to these databases to aid in comparable selection and adjustment research. Obsolescence . The value of assets diminishes as its capabilities degrade or more desirable alternatives are developed. Functional obsolescence is the presence or absence of a feature which renders the property undesirable. Obsolescence can also occur because the surrounding area changes, making a feature of the property less desirable. Subject. Short for the property being appraised -- the "subject property." Useful life. The time during which a property can provide benefits to its owner. URAR . Short for Uniform Residential Appraisal Report, Fannie Mae form 1004, it is the form most lenders require if they need a full appraisal (that is, with walk-through inspection). USPAP . Short for Uniform Standards of Professional Appraisal Practice, USPAP promotes standards and professionalism in appraisal practice, and is often enacted into law in a state. It is promulgated by the Appraisal Foundation, a non-governmental entity chartered by Congress to, among other things, maintain appraisal standards. Walk-through . An inspection that includes a visit to each part of the interior of the house used in estimating value. If you have a question about any of these terms or need an explanation of an item on your appraisal, feel free to contact us
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Peerless Apprisals LLC
210-375-6024401 E Sonterra Blvd #375
San Antonio, Texas 78258
Helpful articles
Assessment appeal services
January 7, 2023 Most localities determine your property tax burden based on an ad valorem assessment of the property's value. If you you get an unwanted surprise in the mail stating your taxes are going up, you may have good reason to differ with their assessment. Sometimes, matters like this can be solved with a phone call. However, if after discussing your assessment with your local taxing authority you still feel your property was overvalued, an independent, third-party appraiser is often your best bet in proving your case. There are as many different procedures for appealing assessments as there are property taxing districts, so it's important to enlist the help of a professional appraisal firm that's experienced and trained in the ins and outs of your particular jurisdiction. Please note: It makes sense to do your own research before determining whether to go forward with a property assessment appeal, especially before you make the decision to hire a professional appraiser. However, according to the Uniform Standards of Professional Appraisal Practice (USPAP), we are not allowed to take "shortcuts" -- i.e., your research -- and use it on its face as part of our independent evaluation. When you hire us for an assessment appeal, you're commissioning an independent, third-party professional appraisal report. As such we do our own evaluation, beginning to end. If you're right that your property has been overvalued, an independent report such as ours will be even more persuasive than any other evidence you can marshal on your own. But it depends on our ability to do the work independently. Sometimes, you will have a hearing on your assessment appeal and will need for the appraiser you've hired to testify on your behalf. Be assured that at Peerless Appraisals, we are able to professionally and persuasively testify at appeal hearings. Browse our website to learn more about our qualifications, expertise and services offered.
Home Appraisal Ethics
January 7, 2023 Appraising is a profession, and appraisers are professionals. The rigors of becoming a licensed appraiser have increased more than ever before. So it goes without question these days that real estate appraisal can certainly be considered a profession rather than a trade. As with any profession we have a strict ethical code. As appraisers our primary responsibility is to their client. Typically, in residential practice, the lender places the order to the appraiser, becoming the appraiser's client. Appraisers are required to only disclose information to their clients, and as a homeowner, if you would like to review an appraisal report, you generally have to get it through your lender. Other responsibilities also include, accurate figures appropriate to the scope of the assignment, attaining and maintaining an appropriate level of competency and education, and the appraiser must conduct him or herself as a professional. Maintaining high ethics is is what we do everyday at Peerless Appraisals. Appraisers may often have fiduciary obligations to third parties, including homeowners, buyers and sellers, or others. Those third parties normally are listed in scope of the appraisal assignment itself. An appraiser's fiduciary roll is restricted to those parties who the appraiser knows, based on the scope of work or other things in the framework of the job. There are also ethical rules that have nothing to do with clients and others. For example, appraisers must store their work files for a minimum of five years - at Peerless Appraisals, LLC you can rest assured that we adhere to that rule. We demand the highest professional integrity possible from ourselves. Working on orders that contingency fees is not something we can consider That is, we are not able to agree to do an appraisal report and get paid only if the loan closes. We don't do assignments on percentage fees. That is perhaps the appraisal industries most important rule, because it would tend to make appraisers raise the value of homes or properties to increase their fee. We set ourselves to a higher standard. Other unethical practices may be established by state law or professional organizations to which an appraiser belongs. The Uniform Standards of Professional Appraisal Practice (USPAP) also states a violation in ethics as the acceptance of an assignment that is contingent on "the reporting of a pre-determined result (e.g., opinion of value)," "a direction in assignment results that favors the cause of the client," "the amount of a value opinion," as well as other situations. We follow these rules to the letter which means you can be assured we are doing everything we can to provide an unbiased determination of the home or property value. With Peerless Appraisals you won't have any doubts that you're receiving 100 percent ethical, professional service.
When to hire an appraiser?
For answers to your questions about appraisal in San Antonio please call us for more information.
What is in an appraisal report?
Depending on the type of report an appraisal contains:
Who hires an appraiser?
Appraisers are frequently hired by lenders to establish the market value of a property for a loan transaction to ensure that the property is valued in the amount of the requested loan. Lawyers and accountants frequently hire appraisers to help determine property values in the course of divorce and estate settlements.
Real estate appraisal vs real estate inspection?
A Peerless Appraisals LLC appraiser does not provide a home inspection but performs a third party investigation of all accessible facets of a property including structure and amenities, from roof to foundation and surrounding areas for the purposes of determining its value on the open market.
How do appraisers get information?
The data used in an appraisal report can be what is termed “Specific” or “General” and is gathered from Multiple Listing Services (MLS), tax records, and a range of other public documents and records. The appraiser compiles the data and comparative studies in combination with additional standard methods of analysis.
What standards must an appraiser follow?
All Peerless Appraisals LLC appraisers must ensure that the following items are covered:
All certified appraisers must meet extensive requirements. Peerless Appraisals LLC appraisers are licensed to provide qualified reports and members of the Uniform Standards of Professional Appraisal Practice (USPAP).
Who sees an appraisal report?
Appraisal reports for mortgage transactions may be paid for by the buyer for closing a sale, though the lending financial institution retains the right to use the report and all of its information. When a homeowner hires an appraiser directly however, the appraiser may specify the purpose of the appraisal for estate planning or tax disputes and the homeowner retains all rights to the appraisal.