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Appraisals In 48 has answers to "Frequently Asked Questions"

Appraisals In 48 is prepared to elaborate on any concerns you might have about appraisals in Harris County. Contact us today to see how we can help solve your valuation problems.

What is an appraisal?
What does an appraiser do?
Why would someone require a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, how can I have certainty that the value conclusion is accurate?
How are appraisers certified?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Harris 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?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Return to top)

An appraisal is an evaluation allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the house, minus age and physical deterioration, plus the land value. The Sales Comparison Approach deals with finding similar properties nearby and figuring out the value based on comparing those homes to the home in question. Being the most popular approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.

What does an appraiser do?   (Return to top)

An appraiser offers a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers document their conclusions in appraisal reports.


Why would someone require a real estate appraisal?   (Return to top)

There are many reasons to get an appraisal from Appraisals In 48 with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
  • To obtain a loan.
  • To reduce your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To contest improperly assessed property taxes.
  • To settle an estate.
  • To give you a negotiating tool when purchasing real estate.
  • To figure out the most probable sales 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 civil case.
If you need a more detailed explanation of the appraisal process, please click here.


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

Appraisers do not do complete house inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the home, from the roof to the bottom. The general property inspector's report will include an evaluation of the integrity 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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Return to top)

Simply put, it's night and day. What the CMA relies upon are ill-defined trends. An appraisal is based on comparable sales that can be validated by records. Also, the appraisal checks other factors like condition, location and replacement prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is who's creating the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. 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 collect only a flat fee for work they perform, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (Return to top)

Every appraisal must demonstrate a supported estimate of value and must identify the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value reported and a definition of that value.
  • 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 property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed 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 involved in the process of completing the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the appraisal, how can I have certainty that the value conclusion is accurate?   (Return to top)

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

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

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

  • The final appraisal report was easy to explain, sound and defensible.
There are rigorous classroom and experience requirements that must be met in order to get an appraisal license in Texas. Likewise, appraisers must stick to a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Licensing and certification requires coursework, tests and experience working under a supervisor. Once licensed, he/she is required to complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Return to top)

Most of the time, appraisers are employed by mortgage lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Harris County or other areas?   (Return to top)

Gathering information is one of the main tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is received from a variety of places. To research recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely 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 product.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.


What can a full appraisal do for me?   (Return to top)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to figure out 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 getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


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

PMI is short for for Private Mortgage Insurance. It takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the property 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.

Has your real estate appreciated since you first purchased? Call Appraisals In 48 today at 832-766-2020 to see if you can cancel your Private Mortgage Insurance premium.

Does the appraiser need anything from the homeowner in advance?   (Return to top)

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 status of its amenities. Inside, pick up any clutter and make sure 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.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Information on the latest purchase of the property in the last three years.
  • Title policy that lists encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Find copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

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."



Who has rights to the appraisal report?   (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.

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


Are some home improvements more worthwhile than others?   (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'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 were second, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.