Keller Appraisal has answers to "Frequently Asked Questions"


	Keller Appraisal is always ready to reply to any questions you might have about appraisals or real estate in Midlothian and Chesterfield County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to request a real estate appraisal?
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?
Upon completion of the appraisal, how can I have confidence that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Chesterfield County or other areas?
Why should I hire a licensed appraiser?
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 appointment
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Back to top)

The appraisal process is an estimation that leads to an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate. The Cost Approach is one of the processes that appraisers use to find the value of a property; it involves discerning what the improvements would cost less physical depreciation, adding the land value. Another of the approaches is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of value for a house. The Income Approach is mainly 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 would bring in.

What does an appraiser do? (Back to top)

An appraiser forumlates a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers exhibit their expert investigation in appraisal reports.

What would cause me to request a real estate appraisal? (Back to top)

There are many reasons to get an appraisal from Keller Appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:

If you are applying for a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To contest high property taxes.
If you need to settle an estate.
To give you a negotiating tool when purchasing real estate.
To figure out an honest price when listing your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

For a more detailed description of the appraisal process click here.

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

Appraisers do not do perform home inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the house, from the top to the bottom. The archetypal 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 accessible 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? (Back to top)

Simply, they have nothing in common. What the CMA depends on are superficial trends. The appraisal is based on similar verifiable comparable sales. In addition, the appraisal checks other factors like condition, area and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The person behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who bases a career on valuing real estate in and around Chesterfield 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 collect only a flat sum for assignments, regardless of their value conclusion.

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

Every report must demonstrate a believable estimate of value and will clearly state the following:

Who engaged the appraiser 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 appraiser's opinions and conclusions.(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 characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
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 included in the activity of completing the appraisal.

For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, how can I have confidence that the value conclusion is legitimate? (Back to top)

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

The appraisal contained a suitable analysis of the information.

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

That appraisal services were rendered in a careful and judicious manner.

That a trustworthy, defensible appraisal report was communicated.

There are intense education and practical experience requirements that must be met in order to get an appraisal license in Virginia. Likewise, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she is required to complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers? (Back to top)

Typically, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

One of the most important activities of an appraiser is to assimilate property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, 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 creating appraisals for other properties in the same market.

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

If you're making any kind of financial decision and the value of your home matters, you'll want a full appraisal. 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. If you're engaged in an estate settlement or divorce, it ensures that property is 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.

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

PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in the event a borrower doesn't pay on the loan and the value of the home is lower than the loan balance. 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 money you keep from getting rid of your PMI pays for the appraisal in a matter of months. Keller Appraisal is in the business of tracking value trends in Midlothian and Chesterfield County. Contact us today.

Should I do anything in advance of the appraisal appointment (Back to top)

We begin 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 status of its amenities. Inside, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:

Information on any written private easements, such as a shared driveway with a neighbor.
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

Define "Market Value" (Back 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? (Back 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 bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly. In these situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others? (Back to top)

It really depends on the market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the best ROI 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, yielding 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 overbuilt for your neighborhood in terms of size.