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Royalty Appraisals Inc. has answers to "Frequently Asked Questions"

Royalty Appraisals Inc. is happy to handle any inquiries you might have about appraisals or real estate in Washington County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What would cause me to need your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal is done, how can I have confidence that the value indicated is accurate?
How difficult is it to become certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Washington County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
What is "Market Value?"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



Describe an appraisal   (List of questions)

An appraisal is an inspection that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate 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 less physical degradation, plus the land value. The Sales Comparison Approach involves searching for comparable homes in close proximity and discerning value based on comparing those prior sales to the house in question. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a property. The Income Approach is primarily used for finding 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   (List of questions)

An appraiser produces a professional, unbiased assessment of market value, in the support of real property exchanges. Appraisers document their professional findings in appraisal reports.


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

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax obligations.
  • To show a homeowner has 30% equity and remove PMI.
  • To contest inflated property taxes.
  • To settle an estate.
  • To offer you a negotiating tool when purchasing real estate.
  • To figure out a reasonable price when listing your home.
  • 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 definitely help.
Click here for a more detailed explanation of the process of getting an appraisal.


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

The appraiser is not a home inspector and does not do a comprehensive home inspection. A third-party home inspector will investigate the structure of the property, from the top to the bottom. The stereotypical home inspector's report will include an evaluation of the condition of the home's heating systems, 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)?   (List of questions)

Frankly, it's apples and oranges. What the CMA relies upon are superficial trends. Appraisals use similar sales which are verifiable resources. Area and construction costs are also important in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is who's doing the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.

What are the contents of an appraisal report?   (List of questions)

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • 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.
  • What was entailed in the process of completing the appraisal.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal is done, how can I have confidence that the value indicated is accurate?   (List of questions)

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

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

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

  • The final appraisal report was transparent, legitimate and not easily discredited.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that give us the background to formulate an unbiased opinion. Plus, appraisers must stick to a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Licensing and certification requires coursework, tests and practical experience. Once an appraiser is licensed, he or she must then engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who do appraisers work for?   (List of questions)

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

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

Compiling data is one of the primary roles of an appraiser. Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is collected from a many places. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents. Appraisers often need to report when a property lies 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 assimilates general data from his or her past experience in doing assignments for other houses 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. When selling your home, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Royalty Appraisals Inc. is the best way to ensure assets are divided fairly. Simply put, 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?   (List of questions)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan protects the lender in case a borrower defaults on the loan and the value of the house is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The amount you keep from getting rid of the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Royalty Appraisals Inc. when it comes to analyzing real estate appreciation in Springfield and Washington County. Contact us today.

Does the appraiser need anything from me in advance?   (List of questions)

The first step in most appraisals is the home inspection. 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. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if available).
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?"   (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."



Who has rights to the appraisal report?   (List of questions)

For mortgage transactions, the lender requests 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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may state 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.


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

It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

As a rule, the most value returned from renovating a home comes in the kitchen. 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%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.