Sunrise Appraisal Group has answers to "Frequently Asked Questions"

Sunrise Appraisal Group is always more than happy to answer any inquiries you might have about appraisals or real estate in Lima and Allen County. Contact us today to talk about how we can help you with your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would require services from Sunrise Appraisal Group?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal has been delivered, how can I have assurance that the value conclusion is accurate?
What does it mean for an appraiser to be licensed?
Who are an appraiser's customers?
Where does Sunrise Appraisal Group get the data used to estimate values in Allen County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?

Define the term "Appraisal"   (Top)

An appraisal is an evaluation that concludes with an opinion of value. This opinion or estimate is discerned by a formal method that generally utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, less the age and physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

Describe what an appraiser does   (Top)

An appraiser offers a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers present their expert conclusions in appraisal reports.

What are the reasons I would require services from Sunrise Appraisal Group?   (Top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal report include:
  • To obtain a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To challenge improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you a negotiating tool when purchasing a home.
  • To figure out a reasonable 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 home.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
For a more extensive explanation of the appraisal process click here.

What is the difference between an appraisal and a home inspection?   (Top)

The appraiser is not a home inspector nor does he/she do a complete home inspection. The point of a home inspection is to investigate the structure of the home from basement to rooftop. The usual house inspector's report will contain 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

Simply, they have nothing in common. The CMA relies on vague market trends. An appraisal is based on comparable sales that can be validated by records. The appraisal report will also include neighborhood and construction prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is who's behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, Ohio licensed professional who bases a career on valuing real estate in and around Allen County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for assignments, regardless of their outcome.

What are the contents of an appraisal report?   (Top)

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The reason for the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • 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.
  • What was entailed in the activity of completing the assignment.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been delivered, how can I have assurance that the value conclusion is accurate?   (Top)

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

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

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

  • That a solid, defensible appraisal report was conferred.
To become a state licensed appraiser, there are extensive education requirements as well as experience that must be attained. Plus, appraisers must abide by a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Top) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and experience working under a supervisory appraiser. Once licensed, he/she is required to engage in continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Top)

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 Sunrise Appraisal Group get the data used to estimate values in Allen County or other areas?   (Top)

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

General data is received from a numerous places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal?   (Top)

An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; 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. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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

PMI stands for Private Mortgage Insurance. This supplementary plan covers the lender in the event a borrower defaults on the loan and the market price of the property is lower 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.

Does your monthly loan payment have a lineitem for PMI?Call Sunrise Appraisal Group today at 419-227-7070 or send us an e-mail. A current appraisal could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Top)

We start with an inspection of the property. 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. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any bushes 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:
  • Records on the latest purchase of the property in the last three years.
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • Most recent real estate tax bill from Allen and or legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • A list of "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (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?   (Top)

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.

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

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

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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.