Mitchell Appraisals has answers to "Frequently Asked Questions"


	Mitchell Appraisals is willing to talk to you about any inquiries you might have about appraisals in Santa Rosa County. Contact us today to talk about how we can help you with your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to request a real estate appraisal?
How is an appraiser different than a home inspector?
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, what guarantee is there that the final number is legitimate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does Mitchell Appraisals get the data used to estimate values in Santa Rosa County or other areas?
How can a licensed appraiser help me?
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 inspection
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Go to list of questions)

The process of performing an appraisal report deals with an investigation which forms an opinion of value. The appraiser will typically use a few "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves concluding what the improvements would cost minus physical deterioration, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves concluding a comparison to similar properties nearby. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the income generated by the property.

Describe what an appraiser does (Go to list of questions)

An appraiser forumlates a professional, unbiased determination of market value, in the support of real property transactions. Appraisers summarize their professional conclusions in appraisal reports.

What would cause me to request a real estate appraisal? (Go to list of questions)

There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for getting an report include:

To receive a loan.
If you would like to lower your property tax obligations.
To demonstrate a homeowner's acquired equity and remove insurance.
To challenge improperly assessed property taxes.
To deal with an estate.
To offer you a negotiating tool when purchasing real estate.
To figure out the most probable sales price when selling 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 have to deal with being in a lawsuit - an appraisal will definitely help.

If you need a more detailed explanation of the appraisal process, please click here.

How is an appraiser different than a home inspector? (Go to list of questions)

Home inspectors do not generate an opinion of value and do not do appraisal reports. A third-party home inspector will evaluate the structure of the home, from the roof to the bottom. Generally, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical systems, 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? (Go to list of questions)

Simply put, it's night and day. What the CMA depends on are vague trends. An appraisal relies on comparable sales that can be verified by records. The appraisal report will also include neighborhood and building values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the real estate agent, who gets a commission based upon the price of the home.

What can I expect to see in my appraisal report? (Go to list of questions)

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

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value reported and a definition of the value reported.
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 description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible items.
All 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.
The scope of work used while working up the appraisal.

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

After completing the report, what guarantee is there that the final number is legitimate? (Go to list of questions)

In communicating an appraisal report, each appraiser must ensure the following:

The appraisal used a suitable analysis of the data.

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

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

The final appraisal report was easy to explain, legitimate and not easily discredited.

To become a state licensed appraiser, there are education requirements as well as real world experience that must be logged. In addition, appraisers must obey a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he/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 engages the services of appraisers? (Go to list of questions)

Most of the time, appraisers are hired by mortgage lenders to render a value opinion on a house involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Mitchell Appraisals get the data used to estimate values in Santa Rosa County or other areas? (Go to list of questions)

One of the main tasks an appraiser performs is to collect data. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is collected from a variety of places. To look up recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents. Appraisers routinely have 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 service.

And most importantly, the appraiser gathers 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? (Go to list of questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. When selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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 house 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? (Go to list of questions)

PMI stands for Private Mortgage Insurance. PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Does your monthly house payment have a lineitem for PMI?Call Mitchell Appraisals today at 850-939-2888 or send us an e-mail. Documentation of your home's present value could save you thousands.

Should I do anything in advance of the appraisal inspection (Go to list of questions)

We start with an inspection of the property. During this process, the appraiser 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. 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 shrubs and move 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.

To help speed things along as well as ensure a more accurate report, try if possible to have the following items:

A plot plan or survey of the house and land (if readily available).
A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements if the property is to be appraised "as complete".

What is "Market Value?" (Go to 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."

Once complete, who actually owns the appraisal report? (Go to 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 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, 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.

Are some home improvements more worthwhile than others? (Go to list of questions)

It really depends on the market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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 were second, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.