Gibson Appraisals has answers to "Frequently Asked Questions"


	Gibson Appraisals is ready to talk to you about any concerns you might have about appraisals or real estate in Madison County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons I would need a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the report, how can I have certainty that the value indicated is veritable?
What does it mean for an appraiser to be licensed?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Madison 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?
Define "Market Value"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (Back to top)

An appraiser provides an estimation that produces an opinion of value. The real estate appraiser must use a several "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus depreciation and physical deterioration, adding the land value. The Sales Comparison Approach involves finding similar properties in close proximity and finding value based on making a comparison of those properties to the property in question. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. 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 money produced by the property.

What does an appraiser do? (Back to top)

An appraiser provides a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers summarize their analysis in appraisal reports.

What are the reasons I would need a real estate appraisal? (Back to top)

There are many reasons to obtain an appraisal from Gibson Appraisals with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:

If you are applying for a loan.
To reduce your tax burden.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To contest inflated property taxes.
To deal with an estate.
To give you a leg-up when purchasing real estate.
To figure out an honest property value when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every property.
It's possible you could be involved in a lawsuit - an appraisal will definitely help.

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

Is an appraisal the same as a home inspection? (Back to top)

Home inspectors do not come to an opinion of value and are not appraisers. The purpose of a home inspection is to investigate the structure of the home from foundation to attic. The usual property 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 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)

Frankly, they share nothing in common. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be validated by records. Also, the appraisal checks other factors like condition, location and replacement prices. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.

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

Every appraisal must indicate a credible value opinion and will document the following:

The client and other intended users.
How the appraisal is supposed to be used.
The purpose of the appraisal.
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 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 items.
Any 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 considered to complete the job.

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

After completing the report, how can I have certainty that the value indicated is veritable? (Back to top)

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

That the information analysis implemented in the appraisal was proper.

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

That appraisal services were rendered in a careful and cognizant manner.

That a credible, defensible appraisal report was imparted.

To become a state licensed appraiser, we must meet considerable education and experience requirements that train us to formulate an unbiased opinion. Plus, appraisers must stick to a strict 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).

(Back 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 real world experience. Once licensed, he or she must then complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who do appraisers work for? (Back to top)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Madison County or other areas? (Back to top)

Collecting data is one of the main things an appraiser does. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is received from a number of places. Local Multiple Listing Services (MLS) have data on recently sold homes that could 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 service.

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

How can a licensed appraiser help me? (Back to top)

An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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. 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? (Back to top)

PMI stands for Private Mortgage Insurance. This supplemental policy takes care of the lender if a borrower defaults on the loan and the market price of the house is less than what is owed on the loan. 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.


	Is PMI something increasing your monthly house payment?Call Gibson Appraisals today at 2567970877 or send us an e-mail. Documentation of your home's present value could save you thousands.

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

The first step in most appraisals is the property 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. Inside, pick up any clutter and make sure we can get to things like furnaces and water heaters. In the yard, trim any landscaping 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 information on the purchase of the property for the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

Define "Market Value" (Back to top)

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."

Once complete, who actually owns the appraisal report? (Back to top)

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 certainly entitled to a copy of the appraisal - it's usually bundled 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 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.

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

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.