AK Appraisal Services has answers to "Frequently Asked Questions"


	AK Appraisal Services is always ready to address any inquiries you might have about appraisals in Columbus and Bartholomew County. Contact us today to see how we can help solve your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons a person would require services from AK Appraisal Services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Upon completion of the report, how can I have assurance that the value conclusion is valid?
What goes into an appraiser's certification?
Who employs appraisers?
Where does AK Appraisal Services get the data used to estimate values in Bartholomew 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?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?

Define the term "Appraisal" (Back to top)

The appraisal process is an evaluation that produces an opinion of value. The appraiser will use a number of "approaches," typically three, to conclude the estimation of market value. One of the three is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding similar homes nearby and discerning value based on making a comparison of those properties to the property in question. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the money produced by the property.

Describe what an appraiser does (Back to top)

An appraiser provides a professional, unbiased opinion of market value, in the support of real estate exchanges. Appraisers document their expert analysis in appraisal reports.

What are the reasons a person would require services from AK Appraisal Services? (Back to top)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:

If you are applying for a loan.
To lower your property taxes.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To fight inflated property taxes.
If you need to take care of an estate.
To give you an edge when purchasing a home.
To figure out a likely sales price 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 require an appraisal on every property.
If you are ever involved in a civil case.

For a more extensive explanation of the appraisal process click here.

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

The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will investigate the structure of the home, from the top to the bottom. Commonly, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Back to top)

Frankly, it's apples and oranges. The CMA relies on indistinct trends in the market. An appraisal relies on comparable sales that can be validated by public record. Location and construction costs are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is hands down the most significant difference between a CMA and an appraisal. 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. Likewise, the agent has something at stake since they get a commission based on the property's selling price 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 can I expect to see in my appraisal report? (Back to top)

The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value reported and a definition of that value.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, 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.
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 entailed in the activity of completing the assignment.

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

Upon completion of the report, how can I have assurance that the value conclusion is valid? (Back to top)

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

That the information analysis implemented in the appraisal was appropriate.

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

That appraisal services were not conducted in a careless or negligent manner.

That a solid, supportable appraisal report was imparted.

There are intense classroom and practical experience requirements that must be met in order to get an appraisal license in Indiana. In addition, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and real world experience. Once licensed, he or she must then engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who employs appraisers? (Back to top)

Mortgage lenders are an appraiser's most likely client, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does AK Appraisal Services get the data used to estimate values in Bartholomew County or other areas? (Back to top)

Gathering data is one of the main tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is received from a numerous sources. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers often have 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 product.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.

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

An appraisal is a worthwhile whenever the value of your home is relevant to some financial decision. When selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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. 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? (Back to top)

PMI is an acronym for Private Mortgage Insurance. This supplementary plan guards the lender in the event a borrower doesn't pay on the loan and the value of the property is less 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.


	Has your home value appreciated since you first purchased? Call AK Appraisal Services today at 8123723664. You may be able to save money by removing your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection (Back to top)

The first step in most appraisals is the home inspection. During this process, we 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. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help expedite our work 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.
Title policy that describes encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A list of "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser 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."

Does the appraisal belong to the bank or the consumer? (Back to top)

In most real estate transactions, the appraisal is ordered by the lender. 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 engaging 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.

I want to get more for my house. Where should I spend money renovating? (Back to top)

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

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