Home Analytics has answers to "Frequently Asked Questions"

Home Analytics is prepared to elaborate on any concerns you might have about appraisals in Mecklenburg County. Contact Home Analytics today to talk about how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What would cause me to request your services?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the report has been completed, what assurance is there that the value conclusion is valid?
How hard is it to become certified?
Who do appraisers work for?
Where does Home Analytics get the information used to estimate values in Mecklenburg 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?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Return to top)

The method of producing an appraisal consists of an evaluation which forms 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, then adding the land value. Another of the approaches is the Sales Comparison Approach - which concerns making a comparable analysis to other similar properties within a close proximity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residential property. The third approach is the Income Approach, which is the best 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?   (Return to top)

An appraiser provides an unprejudiced and well supported assessment of market value, in the support of real estate transactions. Appraisers present their expert findings in appraisal reports.


What would cause me to request your services?   (Return to top)

There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To contest improperly assessed property taxes.
  • To settle an estate.
  • To provide you an edge when purchasing real estate.
  • To determine an honest property value when putting your home on the market.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • 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.


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

Home inspectors do not estimate an opinion of value and are not appraisers. A third-party home inspector will inspect the structure of the house, from the top to the foundation. Commonly, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed 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)?   (Return to top)

Honestly, they have nothing in common. The CMA utilizes market trends to conduct most of their business. Appraisals use similar sales which are valid resources. Area and building costs are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is actually the most significant difference between a CMA and an appraisal. 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 work they perform, regardless of their value conclusion.

What are the contents of an appraisal report?   (Return to top)

Each appraisal should demonstrate a believable value opinion and will document the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value reported and a definition of that value.
  • The effective date of the value opinion.
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • 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 view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, what assurance is there that the value conclusion is valid?   (Return to top)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • That the information analysis implemented in the appraisal was suitable.

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

  • That appraisal services were not rendered in a careless or negligent fashion.

  • The final appraisal report was transparent, legitimate and not easily discredited.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that give us the background to formulate an unbiased opinion. Plus, appraisers must obey 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 documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Return to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she is required to take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who do appraisers work for?   (Return to top)

Mortgage lenders are an appraiser's most likely 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 Home Analytics get the information used to estimate values in Mecklenburg County or other areas?   (Return to top)

One of the main tasks an appraiser must accomplish is to compile data. Data can be described as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a many places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.

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

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your house, an appraisal assists you in setting 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. 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?   (Return to top)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the house is less than what the borrower still owes on the loan. 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.

Did you secure your mortgage with less than 20% down? Call Home Analytics today at (704) 491-4862 to see if you can save money by removing your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal inspection   (Return to top)

We start 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 find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

To help speed things along plus 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).
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • A list of "proposed" improvements when the property is being appraised "as complete".

Define "Market Value"   (Return to top)

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."

Who has rights to the appraisal report?   (Return 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 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 hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

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

This really depends on where the home is. 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 best ROI 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, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.