A.C. Read Appraisal Service has answers to "Frequently Asked Questions"

A.C. Read Appraisal Service is always more than happy to talk to you about any inquiries you might have about appraisals or real estate in our coverage area. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to require services from A.C. Read Appraisal Service?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
After completing the report, how can I have assurance that the value indicated is valid?
What goes into an appraiser's certification?
Who hires an appraiser?
Where does A.C. Read Appraisal Service get the information used to estimate values in our coverage areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal?   (Return to top)

An appraisal is a thought process that concludes with an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find value; it involves concluding what the improvements would cost minus physical degradation, adding the land value. The Sales Comparison Approach involves searching for similar houses nearby and finding value based on making a comparison of those properties to the house being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is generally used for finding 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   (Return to top)

An appraiser generates an unbiased and well supported assessment of market value, often in the context of a real estate sale. Appraisers demonstrate their expert findings in appraisal reports.

What would cause me to require services from A.C. Read Appraisal Service?   (Return to top)

There are a lot of reasons to order an appraisal from A.C. Read Appraisal Service with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To show a homeowner has 30% equity and remove insurance.
  • To challenge improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To determine a likely property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
For a more detailed description of the appraisal process click here.

What is the difference between an appraisal and a home inspection?   (Return to top)

Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. A third-party home inspector will investigate the structure of the home, from the roof to the foundation. The standard house inspector's report will include an evaluation of the condition of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible 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?   (Return to top)

Frankly, it's like comparing Shakespeare to reality TV. The CMA depends on indefinite market trends. An appraisal utilizes comparable sales that can be verified by records. Also, the appraisal looks at other factors like condition, area and building costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Pennsylvania licensed professional who bases their livelihood on valuing homes in and around Monroe County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for assignments, regardless of their outcome.

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

Each report should indicate a credible estimate of value and must identify the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the appraisal.
  • The reason for the appraisal.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.
  • Relevant property attributes, including: location, physical description, legal attributes, economic attributes, 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.
  • 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 entailed in the process of completing the job.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have assurance that the value indicated is valid?   (Return to top)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • That the information analysis utilized in the appraisal was appropriate.

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

  • That appraisal services were delivered in a careful and cognizant manner.

  • The final appraisal report was understandable, legitimate and defensible.
To become a state licensed appraiser, we must meet extensive education and experience requirements that enable us to produce an unbiased opinion. Plus, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Return to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification typically translates to many hours of coursework, tests and real world experience. Once an appraiser is licensed, he or she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who hires an appraiser?   (Return to top)

Mortgage lenders are an appraiser's most likely client, needing their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does A.C. Read Appraisal Service get the information used to estimate values in Monroe County or other areas?   (Return to top)

Gathering data is one of the primary activities of an appraiser. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is received from a variety of sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

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

Why should I hire a licensed appraiser?   (Return to top)

If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're selling your house, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from A.C. Read Appraisal Service is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it?   (Return to top)

PMI stands for Private Mortgage Insurance. PMI guards the lender in case a borrower doesn't pay on the loan and the value of the house 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.

The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than A.C. Read Appraisal Service when it comes to analyzing real estate appreciation in our coverage areas. Contact us today.

How do I get ready for the appraiser?   (Return 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. Inside, make sure it is clutter free and that we can access 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 plus ensure a more accurate report, try if possible to have the following items:
  • Any information on the purchase of the property for the last three years.
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • Most recent real estate tax bill from Monroe and or legal description of the property.
  • Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • Information on "Homeowners Associations" or condominium covenants and fees.

Define "Market Value"   (Return 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."

Does the appraisal belong to the bank or the consumer?   (Return 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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

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

I want to get more for my house. Where should I spend money renovating?   (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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 most value returned 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.