Arkansas Real Estate Appraisal Professional Inc. has answers to "Frequently Asked Questions"


	Arkansas Real Estate Appraisal Professional Inc. is willing to talk to you about any concerns you might have about appraisals or real estate in Hot Spring County. Contact us today to see how we can help solve your specific valuation problems.

Describe an appraisal
Describe what an appraiser does
Why would I request your 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 are the contents of an appraisal report?
Once the report has been completed, what guarantee is there that the value indicated is accurate?
What are the requirements to be a certified appraiser?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Hot Spring 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
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Describe an appraisal (Go to list of questions)

The appraisal process is an evaluation that produces an opinion of value. This opinion or estimate is found by using a formal method that generally utilizes three "common approaches to value". The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves discerning what the improvements would cost less physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a home. 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 income a property produce.

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

An appraiser forumlates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers summarize their findings in appraisal reports.

Why would I request your services? (Go to list of questions)

There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:

If you are applying for a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove PMI.
To contest improperly assessed property taxes.
If you need to settle an estate.
To give you a leg-up when purchasing a home.
To figure out a likely price when putting your home on the market.
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 ever find yourself in a lawsuit.

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

Is an appraisal the same as a home inspection? (Go to list of questions)

Appraisers do not do provide home inspections and are not home inspectors. A third-party home inspector will judge the structure of the property, from the roof to the bottom. Usually, a home inspection report will evaluate the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible 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? (Go to list of questions)

Frankly, it's like comparing opera to country. What the CMA depends on are ill-defined trends. The appraisal depends on similar definite comparable sales. Area and building prices are also precedent in an appraisal. 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.

Who's behind the report is hands down 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 created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their value conclusion.

What are the contents of an appraisal report? (Go to list of questions)

Each report should demonstrate a credible estimate of value and must document the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 included in the activity of completing the appraisal.

For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, what guarantee is there that the value indicated is accurate? (Go to list of questions)

In communicating an appraisal report, each appraiser must ensure the following:

That the information analysis implemented in the appraisal was appropriate.

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

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

That a credible, defensible appraisal report was conferred.

To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to produce an unbiased opinion. Plus, appraisers must obey a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) 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 experience working under a supervisory appraiser. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Go to list of questions)

Mortgage lenders are an appraiser's most likely client, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

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

One of the most important things an appraiser does is to compile property data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers routinely need 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 most importantly, the appraiser gathers 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? (Go to list of questions)

An appraisal is a worthwhile whenever your home's value is pertinent to some financial decision. When selling your home, an appraisal assists you in setting the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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 means you can make smart financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Go to list of questions)

PMI stands for Private Mortgage Insurance. It covers the lender in the event a borrower defaults on the loan and the value of the property is less than what the borrower still owes on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.


	Has your real estate appreciated since you first purchased? Call Arkansas Real Estate Appraisal Professional Inc. today at 5013325300. You may be able to get rid of your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment (Go to list of questions)

The first step in most appraisals is the home inspection. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and move any items that would make it difficult to measure the structure. Indoors, make sure we can get to items like furnaces and water heaters.

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

Information on any written private easements, such as a shared driveway with a neighbor.
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A bill for your most recent real estate taxes which should also contain a legal description of the property.

How does an appraiser 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."

Does the appraisal belong to the bank or the consumer? (Go to 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 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.

The exception to this rule is when a home owner engages an appraiser directly. 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 noted otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (Go to list of questions)

The answer to this is different depending upon the location of the home. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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 weren't far behind, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.