Appraisal Dynamic has answers to "Frequently Asked Questions"


	Appraisal Dynamic is always eager to elaborate on any inquiries you might have about appraisals in Algonac and Saint Clair County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to need 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 are the contents of an appraisal report?
Once the report has been completed, how can I have confidence that the value conclusion is veritable?
How difficult is it to become certified?
Who employs appraisers?
Where does Appraisal Dynamic get the data used to estimate values in Saint Clair County or other areas?
How can a licensed appraiser help 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 inspection
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?

What is an appraisal? (Return to top)

The appraisal process is an evaluation that generates an opinion of value. The real estate appraiser will use a few "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find the value of a home; it involves discerning what the improvements would cost without physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparison to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a residence. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

Describe what an appraiser does (Return to top)

An appraiser forumlates a professional, unbiased opinion of market value, often in the context of a real estate exchange. Appraisers illustate their conclusions in appraisal reports.

What would cause me to need your services? (Return to top)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:

To get a loan.
To reduce your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To challenge inflated property taxes.
If you need to settle an estate.
To offer you a leg-up when purchasing a home.
To find a reasonable sales price when putting your home on the market.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS require an appraisal on every home.
If you ever find yourself in a lawsuit.

If you need more information regarding the appraisal process, please click here.

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

The appraiser is not a home inspector and does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the property, from the top to the bottom. Usually, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible 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)? (Return to top)

Simply, they have nothing in common. The CMA utilizes market trends to create most of their business. An appraisal is based on comparable sales that can be verified by records. Location and construction values are also important 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.

The person behind the report is frankly 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. A certified, Michigan licensed professional who has formed a career on valuing homes in and around Saint Clair County creates the appraisal. 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 previously agreed upon sum for assignments, regardless of their value conclusion.

What are the contents of an appraisal report? (Return to top)

Each report should indicate a believable estimate of value and should document the following:

The client 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 appraisal.(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 valued, 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 the like.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered to complete the assignment.

For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, how can I have confidence that the value conclusion is veritable? (Return to top)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used a suitable analysis of the information.

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

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

That a believable, substantiated appraisal report was imparted.

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

(Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers? (Return to top)

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

Where does Appraisal Dynamic get the data used to estimate values in Saint Clair County or other areas? (Return to top)

Compiling information is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is received from a many sources. To research recent sales to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we look at tax records and other public documents that are usually online nowadays. Appraisers often 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 product.

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

How can a licensed appraiser help me? (Return to top)

An appraisal is a worthwhile whenever the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine 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. 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. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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

PMI is an acronym for Private Mortgage Insurance. This additional plan takes care of the lender in case a borrower defaults on the loan and the value of the property is less than the balance of 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 cancelling your PMI will make up for the price of the appraisal in a matter of months. Appraisal Dynamic is in the business of tracking real estate value trends in Algonac and Saint Clair County. Contact us today.

Should I do anything in advance of the appraisal inspection (Return to top)

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, 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:

A plot plan or survey of the house and land (if available).
Written property agreements, such as a maintenance easement for a shared driveway.
Most recent real estate tax bill from Saint Clair and or legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser define "Market Value"? (Return to top)

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? (Return to top)

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 entitled to a copy of the report - it's usually bundled 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 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 stated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (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 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.