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Collins Appraisal has answers to "Frequently Asked Questions"

Collins Appraisal is always eager to elaborate on any questions you might have about appraisals in Virginia Beach, Chesapeake, Norfolk and Portsmouth. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
Why would I require your services?
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 does the appraisal report contain?
Once the assignment has been completed, how can I have assurance that the value indicated is legitimate?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does Collins Appraisal get the data used to estimate values in Virginia Beach City 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?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who actually owns the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Back to top)

An appraisal is a thought process allowing the appraiser to come to an opinion of value. This opinion or estimate is concluded by using a formal method that generally uses three "common approaches to value". One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which concerns concluding a comparison to similar houses nearby. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a house. The third approach is the Income Approach, which is the most important 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?   (Back to top)

An appraiser generates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers exhibit their professional analysis in appraisal reports.


Why would I require your services?   (Back to top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
  • To receive a loan.
  • If you would like to lower your property tax obligations.
  • To show a homeowner has 30% equity and remove PMI.
  • To challenge high property taxes.
  • To deal with an estate.
  • To offer you an edge when purchasing real estate.
  • To find the most probable property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process dealing with getting an appraisal.


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

The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will inspect the structure of the home, from the roof to the foundation. The archetypal home inspector's report will contain an evaluation of the integrity of the house'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.

My agent performed a CMA for me. Is that the same as an appraisal?   (Back to top)

To be blunt, it's like comparing opera to country. The CMA depends on indistinct local market trends. Appraisals use similar sales which are valid resources. The appraisal report will also contain neighborhood and building costs. 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 doing the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Virginia licensed professional who bases their livelihood on valuing properties in and around Virginia Beach City 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 flat fee for work they perform, regardless of their value conclusion.

What does the appraisal report contain?   (Back to top)

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of 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!)
  • Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, 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 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


Once the assignment has been completed, how can I have assurance that the value indicated is legitimate?   (Back to top)

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

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

  • That appraisal services were provided in a careful and conscientious fashion.

  • The final appraisal report was transparent, legitimate and conclusive.
To become a state licensed appraiser, we must fulfill extensive education and experience requirements that enable us to produce an unbiased opinion. Plus, appraisers must follow a strict 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 guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top)

Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. 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 engages the services of appraisers?   (Back to top)

Commonly, appraisers are called upon by lenders to estimate the value of a house involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Collins Appraisal get the data used to estimate values in Virginia Beach City County or other areas?   (Back to top)

Compiling information is one of the main things an appraiser performs. Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is collected from a number of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


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

An appraisal is a worthwhile anytime the value of your home is relevant to some financial decision. When selling your house, an appraisal will help you determine 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 Collins Appraisal is the best documentation to ensure assets are split up fairly. Simply put, 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?   (Back to top)

PMI is short for for Private Mortgage Insurance. PMI covers the lender in case a borrower doesn't pay on the loan and the value of the property is less than what is owed on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

Does your monthly house payment have a lineitem for PMI?Call Collins Appraisal today at 7574862767 or send us an e-mail. Documentation of your home's present value could save you thousands.

How do I get ready for the appraiser?   (Back to top)

We begin 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • A survey or plot map of the property and building (if readily available).
  • 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.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Brag sheet that lists 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 "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (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 actually owns the appraisal report?   (Back to top)

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 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 hiring the appraiser for things outside securing a mortgage. In these situations, 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 do whatever they want with the appraisal.


Which home renovations add the most to the price?   (Back to top)

It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the most value returned 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, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.

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