The Appraisal Connection Inc. has answers to "Frequently Asked Questions"

The Appraisal Connection Inc. is ready to address any questions you might have about appraisals in Forney and Kaufman County. Contact us today to learn how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would I request services from The Appraisal Connection Inc.?
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's in an appraisal report?
Upon completion of the report, how can I have certainty that the value conclusion is legitimate?
How are appraisers certified?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Kaufman 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?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



What is an appraisal?   (Return to top)

An appraisal report is an investigation leading to an opinion of value. The appraiser must use a several "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the approaches that appraisers use to find the value of a home; it involves concluding what the improvements would cost less physical deterioration, plus the land value. Easily the most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable houses nearby. The Sales Comparison Approach is commonly the most definitive and best indicator of value for a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

Describe what an appraiser does   (Return to top)

An appraiser provides an unprejudiced and well justified assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their findings in appraisal reports.


Why would I request services from The Appraisal Connection Inc.?   (Return to top)

There are a lot of reasons to purchase an appraisal from The Appraisal Connection Inc. with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
  • To receive a loan.
  • To reduce your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • If you need to take care of an estate.
  • To give you an edge when purchasing real estate.
  • To find a reasonable property value when selling your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
Click here for a more detailed explanation of the process dealing with getting an appraisal.


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

The appraiser is not a home inspector and does not do a full home inspection. The purpose of a home inspection is to investigate the structure of the home from foundation to attic. The archetypal property inspector's report will contain an evaluation of the integrity of the home's heating system, 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)?   (Return to top)

Honestly, they have nothing in common. The CMA relies on indistinct local market trends. The appraisal relies on similar verifiable comparable sales. Also, the appraisal checks other factors like condition, area and building costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The person behind the report is hands down the most significant difference between a CMA and an appraisal. A CMA is written 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 makes a living out of valuing properties. 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 accept a previously agreed upon sum for assignments, regardless of their value conclusion.

What's in an appraisal report?   (Return to top)

The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical characteristics, legal attributes, economic attributes, the property rights 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 considerations.
  • 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.
  • What was entailed in the process of completing the assignment.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the report, how can I have certainty that the value conclusion is legitimate?   (Return to top)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal used an apropos analysis of the data.

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

  • That appraisal services were done in a careful and judicious fashion.

  • That a solid, supportable appraisal report was imparted.
To become a state licensed appraiser, we must meet extensive education and experience requirements that prepare us to formulate an unbiased opinion. In addition, appraisers must follow a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she must then engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who employs appraisers?   (Return to top)

Typically, appraisers are hired by lenders to render a value opinion on a home 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 values in Kaufman County or other areas?   (Return to top)

Gathering data is one of the primary tasks an appraiser does. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.


Why should I hire a licensed appraiser?   (Return to top)

An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. For those selling a home, you'll want to determine the 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 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. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the house is lower than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Does your monthly mortgage payment have a lineitem for PMI?Call The Appraisal Connection Inc. today at 972-552-2668 or send us an e-mail. Documentation of your home's present value could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Return to top)

We start with an inspection of the home. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can easily access appliances 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:
  • Records on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "Market Value"   (Return to top)

In real estate appraising, 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 has rights to the appraisal report?   (Return to top)

For mortgage transactions, the lender requests 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 included with all the other closing documents - but is not allowed 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 situations, the appraiser may define how the appraisal can be used; 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?   (Return to top)

It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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, an improvement that may not increase your value would be painting just for the sake of redecorating.