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Boardwalk Appraisals, Inc. has answers to "Frequently Asked Questions"

Boardwalk Appraisals, Inc. is prepared to answer any concerns you might have about appraisals or real estate in Lake County. Contact us today to talk about how we can help solve your specific valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone request services from Boardwalk Appraisals, Inc.?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
After completing the report, how can I have certainty that the value indicated is accurate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does Boardwalk Appraisals, Inc. get the information used to estimate values in Lake 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 me in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

Define the term "Appraisal"   (See list of FAQ's)

An appraisal report is an inspection allowing the appraiser to come to an opinion of value. The appraiser must use a few "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a property; it involves finding what the improvements would cost minus physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which involves making a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a residence. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (See list of FAQ's)

An appraiser forumlates an objective and well justified determination of market value, to be used in making real estate transactions. Appraisers document their findings in appraisal reports.

Why would someone request services from Boardwalk Appraisals, Inc.?   (See list of FAQ's)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • To obtain a loan.
  • If you would like to lower your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To contest improperly assessed property taxes.
  • To settle an estate.
  • To offer you a leg-up when purchasing a home.
  • To figure out a likely sales price when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every house.
  • If you are ever involved in a lawsuit.
For a more extensive explanation of the appraisal process click here.

How is an appraisal different than a home inspection?   (See list of FAQ's)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party investigation of the available structure and systems of a property, from the top to the foundation. Usually, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (See list of FAQ's)

To be blunt, it's night and day. The CMA uses market trends to generate most of their business. An appraisal utilizes comparable sales that can be validated by public record. Area and architectural values are also a priority in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is the person behind the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. 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 fee for assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (See list of FAQ's)

Every appraisal should indicate a credible value opinion and should document 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 appraisal.
  • Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
  • Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was involved in the process of completing the job.
For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have certainty that the value indicated is accurate?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis utilized in the appraisal was proper.

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

  • That appraisal services were not carried out in a careless or negligent manner.

  • That a believable, substantiated appraisal report was conferred.
To become a state licensed appraiser, we must meet extensive education and experience requirements that give us the background to produce an unbiased opinion. In addition, appraisers must follow a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (See list of FAQ's) Licensing and certification takes classroom study, tests and practical experience. Once licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (See list of FAQ's)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Boardwalk Appraisals, Inc. get the information used to estimate values in Lake County or other areas?   (See list of FAQ's)

One of the primary tasks an appraiser performs is to assimilate data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is collected from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents. 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 most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.

Why do I need a professional appraisal?   (See list of FAQ's)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out the 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, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Boardwalk Appraisals, Inc. is the best way to ensure assets are divided evenly. Simply put, 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?   (See list of FAQ's)

PMI is short for for Private Mortgage Insurance. This added plan guards the lender in case a borrower is unable to pay on the loan and the value of the home is lower 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.

Is PMI a part of your monthly mortgage payment?Call Boardwalk Appraisals, Inc. today at (352) 735-7464 or send us an e-mail. Documentation of your home's current value could save you thousands.

Does the appraiser need anything from me in advance?   (See list of FAQ's)

We start with an inspection of the home. 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 amenities. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.

You can make our visit 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.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"?   (See list of FAQ's)

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?   (See list of FAQ's)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. 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.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these situations, 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 do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (See list of FAQ's)

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

No matter where you go, however, renovating a kitchen is almost always a safe move. 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%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.