Tim Norris & Associates has answers to "Frequently Asked Questions"


	Tim Norris & Associates is prepared to elaborate on any concerns you might have about appraisals or real estate in Fort Wayne and Allen County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to need your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
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 information used to estimate values in Allen County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (List of questions)

The procedure of writing an appraisal deals with an inspection which leads to an opinion of value. This opinion or estimate is concluded using a formal process that generally utilizes the three main "common approaches to value". The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves discerning what the improvements would cost minus physical depreciation, adding the land value. The Sales Comparison Approach deals with searching for comparable properties in the vicinity and discovering the value based on comparing those properties to the property being investigated. Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do? (List of questions)

An appraiser offers a fair and credible assessment of market value, in the support of real property exchanges. Appraisers summarize their expert investigation in appraisal reports.

What would cause me to need your services? (List of questions)

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:

To obtain a loan.
To lower your tax burden.
To show a homeowner has 30% equity and remove PMI.
To contest high property taxes.
To settle an estate.
To give you a leg-up when purchasing a home.
To find a reasonable property value when selling real estate.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

How is an appraiser different than a home inspector? (List of questions)

Home inspectors do not come to an opinion of value and do not do appraisal reports. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The standard property inspector's report will contain an evaluation of the condition of the property'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.

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

Honestly, they share nothing in common. The CMA utilizes market trends to create most of their business. Appraisals use similar sales which are verifiable resources. The appraisal report will also contain location and building costs. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the largest differentiator is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.

What does the appraisal report contain? (List of questions)

Every report must demonstrate a supported value opinion and should clearly state the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the assignment.
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 property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
All 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.
The scope of work considered while working up the appraisal.

For a more in depth view of what 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 communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

The appraisal used a suitable analysis of the information.

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

That appraisal services were delivered in a careful and conscientious fashion.

That a credible, supportable appraisal report was communicated.

To become a state licensed appraiser, we must meet extensive education and experience requirements that train us to produce an unbiased opinion. Plus, appraisers must follow a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification takes classroom study, tests and real world experience. Once an appraiser is licensed, he/she must then take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

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

Commonly, appraisers are hired by lenders to render a value opinion on real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

One of the primary activities of an appraiser is to compile property data. Data can be categorized as either Specific or General. Specific data is 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. To research recent sales to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely have to report when a property is 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 gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

How can a licensed appraiser help me? (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 a 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. PMI protects the lender if a borrower is unable to pay on the loan and the market price of the house is less than what is owed 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.


	Does your monthly loan payment have a lineitem for PMI?Call Tim Norris & Associates today at 260 471-1061 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? (List of questions)

We start with an inspection of the home. 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, 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, try if possible to have the following items:

Any records on the purchase of the property for the last three years.
List of personal property to be sold with the home.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean? (List of questions)

In real estate appraising, 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? (List of questions)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may stipulate how the appraisal can be used; 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.

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

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

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 (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.