White Tiger Appraisals, Inc. has answers to "Frequently Asked Questions"

 

White Tiger Appraisals, Inc. is always prepared to reply to any inquiries you might have about appraisals in Leesburg and Lake County. Contact White Tiger Appraisals, Inc. today to talk about how we can help solve your specific valuation problems.


Define the term "Appraisal"
What does an appraiser do?
Why would a person require your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the appraisal has been completed, how can I have confidence that the value indicated is legitimate?
How difficult is it to become certified?
Who employs appraisers?
Where does White Tiger Appraisals, Inc. get the information used to estimate values in Lake County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
What is "Market Value?"
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?



Define the term "Appraisal"   (Back to top)

The procedure of performing an appraisal report consists of an investigation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the property, minus age and physical dilapidation, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves figuring a comparison to comparable properties close by. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do?   (Back to top)

An appraiser generates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers present their professional investigation in appraisal reports.


Why would a person require your services?   (Back to top)

There are many reasons to order an appraisal from White Tiger Appraisals, Inc. with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
  • To obtain a loan.
  • If you would like to lower your property tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you a negotiating tool when purchasing a home.
  • To find a likely sales price when selling your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you ever find yourself in a civil case.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraiser different than a home inspector?   (Back to top)

Appraisers do not do perform residential property inspections and are not home inspectors. A third-party home inspector will investigate the structure of the home, from the top to the foundation. Usually, a home inspection report will explain the amenities and the requirements of the house: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Back to top)

Simply, they share nothing in common. The CMA utilizes market trends to create most of their business. The appraisal relies on similar definite comparable sales. The appraisal report will also contain area and construction values. The CMA will provide a non-specific 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 bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

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

Each appraisal must indicate a believable estimate of value and must identify the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • 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 attributes, legal attributes, economic factors, 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 factors.
  • 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.
  • What was involved in the activity of completing the assignment.
For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, how can I have confidence that the value indicated is legitimate?   (Back to top)

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

  • Whether individually or collectively, there were no major errors contained in the report, nor any relevant details left out.

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

  • The final appraisal report was easy to explain, legitimate and not easily discredited.
To become a state licensed appraiser, there are intense education requirements as well as experience that must be attained - all with the end goal of gaining the skills required to render unbiased value opinions. Likewise, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Back to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he or she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (Back to top)

Typically, appraisers are hired by lenders to render a value opinion on property involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does White Tiger Appraisals, Inc. get the information used to estimate values in Lake County or other areas?   (Back to top)

Compiling information is one of the primary tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we use tax records and other public documents. Appraisers routinely need 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 past experience in creating appraisals for other properties in the same market.

Why do I need a professional appraisal?   (Back to top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want a full appraisal. 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 people settling an estate or divorce, an appraisal from White Tiger Appraisals, Inc. is the best documentation to ensure assets are split up evenly. A home 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?   (Back to top)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan covers the lender if a borrower is unable to pay on the loan and the market price of the house is lower 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.

The savings from cancelling your PMI pays for the appraisal in no time. White Tiger Appraisals, Inc. is in the business of tracking real estate value trends in Leesburg and Lake County. Contact us today.

Should I do anything in advance of the appraisal inspection   (Back 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 amenities. On the home's interior, make sure it is clutter free and that 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 outside walls.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • A survey or plot map of the property and building (if readily available).
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements if the property is to be appraised "as complete".

What is "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."

Who actually owns the appraisal report?   (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 report - 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 hiring the appraiser for things outside securing a mortgage. In these situations, 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 use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (Back to top)

This really depends on where the home is. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the best ROI from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms were second, yielding 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.