Kelly Appraisal has answers to "Frequently Asked Questions"

Kelly Appraisal is always willing to elaborate on any questions you might have about appraisals in Christiansburg and Montgomery County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would need your services?
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?
Once the report has been delivered, how can I have assurance that the value indicated is legitimate?
How difficult is it to become certified?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Montgomery County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What is "Market Value?"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



What is an appraisal?   (Go to list of  questions)

The method of producing an appraisal report deals with an inspection which leads to an opinion of value. This opinion or estimate is figured using a formal method that typically utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, minus depreciation and physical deterioration, plus the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns making a comparison to similar houses close by. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a home. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

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

An appraiser produces an unprejudiced and well supported assessment of market value, in the support of real property transactions. Appraisers reveal the details of their professional analysis in appraisal reports.


What are the reasons someone would need your services?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
  • To obtain a loan.
  • To lower your tax burden.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To challenge improperly assessed property taxes.
  • To handle an estate.
  • To offer you an edge when purchasing real estate.
  • To find 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.
  • Government agencies such as the IRS require an appraisal on every house.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
If you need more information about the appraisal process, please click here.


Is an appraisal the same as a home inspection?   (Go to list of  questions)

The appraiser is not a home inspector and he or she does not do a full home inspection. The point of a home inspection is to evaluate the structure of the property from basement to rooftop. For the most part, a home inspection report will evaluate the amenities and the necessities of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

To be blunt, it's apples and oranges. What the CMA depends on are vague trends. Appraisals use similar sales which are valid resources. Location 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 person behind the report is hands down 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 has formed their livelihood on valuing properties in and around Montgomery County creates the appraisal. 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 collect only a flat sum for work they perform, regardless of their outcome.

What's in an appraisal report?   (Go to list of  questions)

The main objective 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, one will customarily see the following:
  • Who engaged the appraiser 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 value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic factors, 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.
  • What was involved in the process of completing the appraisal.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Once the report has been delivered, how can I have assurance that the value indicated is legitimate?   (Go to list of  questions)

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

  • Whether individually or collectively, there were no substantial errors contained in the report, nor any material details left out.

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

  • The final appraisal report was transparent, legitimate and conclusive.
To become a state licensed appraiser, we must meet considerable education and experience requirements that train us to produce an unbiased opinion. Plus, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting 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 are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he or she must then complete 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?   (Go to list of  questions)

Commonly, appraisers are called upon by lenders to render a value opinion on property involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Montgomery County or other areas?   (Go to list of  questions)

Collecting data is one of the primary things an appraiser engages in. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is received from a many places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often 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 most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other houses in the same market.

Why do I need a professional appraisal?   (Go to list of  questions)

An appraisal is a valuable tool anytime your home's value is pertinent to a financial decision. 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. For people settling an estate or divorce, an appraisal from Kelly Appraisal is the best way to ensure assets are split up properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. This supplemental policy guards the lender in case a borrower defaults on the loan and the market price 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.

The money you keep from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Kelly Appraisal stays current with value trends in Christiansburg and Montgomery County. Contact us today.

How do I get ready for the appraiser?   (Go to list of  questions)

We start with an inspection of the property. During this process, we 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. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • A plot plan or survey of the house and land (if available).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements when the property is being appraised "as complete".

What is "Market Value?"   (Go to 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."

Who has rights to the appraisal report?   (Go to list of  questions)

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 hires an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; 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.

I want to get more for my house. Where should I spend money renovating?   (Go to list of  questions)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.