Rose Appraisal Associates has answers to "Frequently Asked Questions"


	Rose Appraisal Associates is always prepared to elaborate on any concerns you might have about appraisals in Bristol and Bristol County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons a person would request a real estate appraisal?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Upon completion of the report, how can I have confidence that the final number is valid?
How are appraisers certified?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Bristol County or other areas?
What can a full appraisal do for me?
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 appointment
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (List of questions)

An appraisal report is an inspection leading to an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or valuation. One of the methods is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which deals with concluding a comparison to comparable homes nearby. Usually, 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 involves estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does (List of questions)

An appraiser forumlates an objective and well supported opinion of market value, to be used in making real estate transactions. Appraisers demonstrate their investigation in appraisal reports.

What are the reasons a person would request a real estate appraisal? (List of questions)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:

If you are applying for a loan.
To lower your property taxes.
To build a case for a homeowner's equity and remove PMI.
To fight inflated property taxes.
To deal with an estate.
To provide you a negotiating tool when purchasing a home.
To find a likely property value when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every property.
If you are ever involved in a civil case.

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

How is an appraisal different than a home inspection? (List of questions)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the house, from the top to the foundation. The standard house inspector's report will include 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 accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal? (List of questions)

Simply put, it's like comparing Shakespeare to reality TV. The CMA uses market trends to generate most of their business. Appraisals use comparable sales which are valid resources. In addition, the appraisal verifies other factors like condition, location and replacement costs. 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 doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who has made a career 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 flat sum for assignments, regardless of their outcome.

What's in an appraisal report? (List of questions)

The main point 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, one will customarily see the following:

Who engaged the appraiser and other intended users.
The intended use of the appraisal.
The appraisal's purpose.
The type of value reported and a definition of that value.
The effective date of the appraisal.(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 description, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible factors.
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 involved in the process of completing the appraisal.

For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

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

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

That the information analysis contained in the appraisal was proper.

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

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

That a solid, substantiated appraisal report was imparted.

There are rigorous education and experience requirements that must be fulfilled in order to get an appraisal license in Rhode Island. Likewise, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification is achieved through classroom study, tests and real world experience. Once an appraiser is licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (List of questions)

Commonly, appraisers are called upon by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Bristol County or other areas? (List of questions)

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

General data is received from a number of sources. To research recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need 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 service.

And last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

What can a full appraisal do for 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 home, an appraisal will help you determine the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Rose Appraisal Associates is the best documentation to ensure assets are split up fairly. A house 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? (List of questions)

PMI is an acronym for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the value of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Did you have less than 20% to put down on your mortgage? Call Rose Appraisal Associates today at 401-640-1654 to see if you can cancel your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal appointment (List of questions)

We begin 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 condition of its features. On the home's interior, make sure it is clutter free and that 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 outside walls.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:

A plot plan or survey of the house and land (if readily available).
List of personal property to be sold with the home.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

What does "Market Value" mean? (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."

Once complete, who actually owns the appraisal report? (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 certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may define 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.

How can I get the most ROI out of home improvements? (List of questions)

The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.