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Anna DeMoss: Appraisals has answers to "Frequently Asked Questions"

Anna DeMoss: Appraisals is always ready to reply to any concerns you might have about appraisals in Houston and Harris County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons someone would request your services?
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 does the appraisal report contain?
After completing the report, what assurance is there that the value indicated is valid?
How are appraisers certified?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Harris County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Go to list of  questions)

An appraiser performs an estimation that leads to an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical deterioration, plus the land value. The Sales Comparison Approach deals with finding comparable homes in close proximity and discovering the value based on comparing those properties to the house in question. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residential property. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

Describe what an appraiser does   (Go to list of  questions)

An appraiser provides a fair and credible determination of market value, to be used in making real estate transactions. Appraisers illustate their expert findings in appraisal reports.


What are the reasons someone would request your services?   (Go to list of  questions)

There are a lot of reasons to purchase an appraisal from Anna DeMoss: Appraisals with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an report include:
  • To receive a loan.
  • If you would like to lower your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
  • To fight high property taxes.
  • To settle an estate.
  • To give you an edge when purchasing real estate.
  • To find a reasonable property value when listing 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.
  • If you ever find yourself in a civil case.
For a more detailed explanation of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (Go to list of  questions)

Home inspectors do not generate an opinion of value and do not use the same forms as appraisers. An inspection is a third-party evaluation of the livable structure and appliances of a house, from the roof to the foundation. The usual house inspector's report will contain an evaluation of the integrity of the house'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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Frankly, it's like comparing sugar and saccharin. What the CMA relies upon are superficial trends. The appraisal is based on specific proven comparable sales. Location and building values are also a priority in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

What does the appraisal report contain?   (Go to list of  questions)

The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The purpose of the appraisal.
  • The type of value reported and a definition of the value reported.
  • The effective date of the value opinion.(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 characteristics, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
  • Any 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 activity of completing the appraisal.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report


After completing the report, what assurance is there that the value indicated is valid?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • That the information analysis contained in the appraisal was proper.

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

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

  • The final appraisal report was transparent, legitimate and conclusive.
There are intense education and on the job experience requirements that must be fulfilled in order to get an appraisal license in Texas. Plus, appraisers must follow a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he/she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (Go to list of  questions)

Mortgage lenders are an appraiser's most likely client, requesting 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 for legal settlements, tax matters and investment decisions.

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

Compiling data is one of the primary activities of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property lies in a flood zone, so 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.


Why do I need a professional appraisal?   (Go to list of  questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out 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. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Anna DeMoss: Appraisals is the best documentation to ensure assets are split up properly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.


What exactly is PMI and how can I get rid of it?   (Go to list of  questions)

PMI is an acronym for Private Mortgage Insurance. This supplemental policy covers the lender if a borrower defaults on the loan and the market price of the home is lower than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

Is PMI a part of your monthly mortgage payment?Call Anna DeMoss: Appraisals today at 713-729-6464 or send us an e-mail. A new appraisal could save you thousands.

How do I get ready for the appraiser?   (Go to list of  questions)

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. Inside, 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 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:
  • A survey or plot map of the property and building (if available).
  • Title policy that lists 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 "proposed" improvements when the property is being appraised "as complete".

Define "Market Value"   (Go to 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."



Who has rights to the appraisal report?   (Go to list of  questions)

In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled 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 cases, the appraiser may define 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.


Are some home improvements more worthwhile than others?   (Go to list of  questions)

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 best ROI 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, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.