Elite Appraisal has answers to "Frequently Asked Questions"


	Elite Appraisal is always prepared to talk to you about any questions you might have about appraisals or real estate in Addison and Dupage County. Contact Elite Appraisal today to see how we can help solve your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
Why would a person need services from Elite Appraisal?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the appraisal, what guarantee is there that the value conclusion is valid?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in Dupage County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Define the term "Appraisal" (List of questions)

The process of creating an appraisal consists of an inspection which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or estimate. One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, less the depreciation and physical dilapidation, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable properties close by. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residence. 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 capital generated by the property.

Describe what an appraiser does (List of questions)

An appraiser produces a fair and credible determination of market value, to be used in making real estate transactions. Appraisers illustate their expert findings in appraisal reports.

Why would a person need services from Elite Appraisal? (List of questions)

There are many reasons to order an appraisal from Elite Appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an report include:

To obtain a loan.
To reduce your tax burden.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To contest inflated property taxes.
To deal with an estate.
To provide you a leg-up when purchasing a home.
To find the most probable price 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.
Because a government agency such as the IRS requires it.
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 about getting an appraisal.

Is an appraisal the same as a home inspection? (List of questions)

Appraisers do not do perform house inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The stereotypical house inspector's report will contain an evaluation of the condition of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)? (List of questions)

Simply put, it's like comparing sugar and saccharin. The CMA utilizes market trends to generate most of their business. Appraisals use similar sales which are verifiable resources. The appraisal report will also contain area 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.

The credentials of the person behind the report is actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who bases their livelihood on valuing homes in and around Dupage County creates the appraisal. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

What's in an appraisal report? (List of questions)

Every report must reflect a credible value opinion and will clearly state the following:

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The purpose of the appraisal.
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!)
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 when completing the job.

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

After completing the appraisal, what guarantee is there that the value conclusion is valid? (List of questions)

In the documentation of an appraisal, each appraiser must ensure the following:

The appraisal contained analysis of the information.

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

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

The final appraisal report was transparent, credible and defensible.

To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be attained. Likewise, appraisers must stick to a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification is achieved through coursework, tests and experience working under a supervisory appraiser. Once licensed, he/she is required to engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who are an appraiser's customers? (List of questions)

Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does an appraiser get the information used to estimate values in Dupage County or other areas? (List of questions)

One of the most important tasks an appraiser engages in is to collect data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is gathered from a variety of sources. To look up recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assembles 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? (List of questions)

An appraisal is a worthwhile anytime the value of your home is pertinent to some financial decision. When selling your home, an appraisal helps you set 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.

What exactly is PMI and how can I get rid of it? (List of questions)

PMI stands for Private Mortgage Insurance. PMI protects the lender in the event 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.


	The amount you keep from getting rid of your PMI will make up for the cost of the appraisal in a matter of months. Elite Appraisal is in the business of tracking real estate value trends in Addison and Dupage County. Contact us today.

How do I get ready for the appraiser? (List of questions)

The first step in most appraisals is the property inspection. 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 features. 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 relocate any items that would make it difficult to measure the structure. Indoors, make sure we can easily access items 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:

Any information on the purchase of the property for the last three years.
Title policy that lists encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A bill for your most recent real estate taxes which should also contain a legal description of the property.

What does "Market Value" mean? (List of questions)

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."

Does the appraisal belong to the bank or the consumer? (List of questions)

For mortgage transactions, the lender orders 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 entitled to a copy of the report - 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.

The exception to this rule is when a home owner hires an appraiser directly. 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 stipulated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (List of questions)

The answer to this is different depending upon the location of the home. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe move. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms weren't far behind, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.