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VALUATION SERVICES, INC has answers to "Frequently Asked Questions"

VALUATION SERVICES, INC is always more than happy to answer any concerns you might have about appraisals in Black Hawk County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would I need services from VALUATION SERVICES, INC?
Is an appraisal the same as 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?
After completing the appraisal, what assurance is there that the final number is trustworthy?
What does it mean for an appraiser to be licensed?
Who do appraisers work for?
Where does VALUATION SERVICES, INC get the data used to estimate values in Black Hawk County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

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

An appraiser performs an evaluation that produces an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or valuation. One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close proximity which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.

Describe what an appraiser does   (See list of FAQ's)

An appraiser produces a professional, unbiased assessment of market value, in the support of real property exchanges. Appraisers exhibit their professional investigation in appraisal reports.

Why would I need services from VALUATION SERVICES, INC?   (See list of FAQ's)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To challenge improperly assessed property taxes.
  • To handle an estate.
  • To give you an edge when purchasing a home.
  • To figure out the most probable 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 home.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
If you need more information about the appraisal process, please click here.

Is an appraisal the same as a home inspection?   (See list of FAQ's)

Appraisers do not do provide residential property inspections and are not home inspectors. The point of a home inspection is to investigate the structure of the property from bottom to attic. Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Frankly, they share nothing in common. The CMA relies on indefinite market trends. An appraisal is based on comparable sales that can be validated by records. Area and building values are also important 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.

The credentials of the person behind the report is frankly the biggest difference between a CMA and an appraisal. 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 produce 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 - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for assignments, regardless of their outcome.

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

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • 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 characteristics, including: location, physical attributes, 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 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.
  • The scope of work used to complete the assignment.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what assurance is there that the final number is trustworthy?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal used an appropriate analysis of the data.

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

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

  • That a believable, supportable appraisal report was communicated.
To become a state licensed appraiser, we must meet extensive education and experience requirements that train us to formulate an unbiased opinion. In addition, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (See list of FAQ's) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (See list of FAQ's)

Most of the time, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does VALUATION SERVICES, INC get the data used to estimate values in Black Hawk County or other areas?   (See list of FAQ's)

One of the most important things an appraiser does is to compile property data. Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a variety of places. To look up recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

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

Why should I hire a licensed appraiser?   (See list of FAQ's)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, 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. A house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.

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. PMI guards the lender in the event a borrower defaults on the loan and the market price of the home is lower 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.

Has your real estate appreciated since you first purchased? Call VALUATION SERVICES, INC today at 319-277-0477. You may be able to save money by removing your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal appointment   (See list of FAQ's)

The first step in most appraisals is the home inspection. 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 (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure we can get to appliances 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:
  • A survey or plot map of the property and building (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.
  • Most recent real estate tax bill and or legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • A list of "proposed" improvements if the property is to be appraised "as complete".

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)

In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner engages an appraiser directly. 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 use the appraisal for any purpose.

Which home renovations add the most to the price?   (See list of FAQ's)

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

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 were second, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.