Big D Appraisals has answers to "Frequently Asked Questions"


	Big D Appraisals is willing to handle any questions you might have about appraisals or real estate throughout the Dallas/Fort Worth Mextroplex. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would someone need services from Big D Appraisals?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
After completing the appraisal, what assurance is there that the value conclusion is trustworthy?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Tarrant County or other areas?
Why should I hire a licensed appraiser?
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 does "Market Value" mean?
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

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

The method of creating an appraisal consists of an investigation which leads to an opinion of value. This opinion or estimate is found by using a formal process that generally uses three "common approaches to value". One of the processes 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. The most common approach in figuring the value of a home is the Sales Comparison Approach which involves figuring a comparison to comparable homes nearby. The Sales Comparison Approach is normally the most definitive and best indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (Go to list of questions)

An appraiser forumlates an impartial and well substantiated determination of market value, in the support of real estate exchanges. Appraisers illustate their expert investigation in appraisal reports.

Why would someone need services from Big D Appraisals? (Go to list of questions)

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

To obtain a loan.
If you would like to lower your property tax obligations.
To show a homeowner has 30% equity and remove PMI.
To challenge improperly assessed property taxes.
To settle an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out the most probable sales price when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
If you ever find yourself in a civil case.

For a more detailed description of the appraisal process 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 use the same forms as appraisers. An inspection is a third-party evaluation of the available structure and appliances of a house, from the top to the bottom. Generally, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Go to list of questions)

Frankly, they share nothing in common. What the CMA depends on are superficial trends. The appraisal is based on specific verifiable comparable sales. Location and construction costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who made a career on valuing homes in and around Tarrant County creates the appraisal. Likewise, the agent has a vested interest in 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 work they perform, regardless of their outcome.

What are the contents of an appraisal report? (Go to list of questions)

Every report must demonstrate a believable estimate of value and should clearly state the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the appraisal.
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!)
Characteristics of the property that have a bearing on the value, 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, items that are more or less permanently installed and even intangible considerations.
Any 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 entailed in the process of completing the appraisal.

For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what assurance is there that the value conclusion is trustworthy? (Go to list of questions)

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

The appraisal used analysis of the data.

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

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

The final appraisal report was transparent, credible and conclusive.

To become a state licensed appraiser, we must meet considerable education and experience requirements that give us the background to produce an unbiased opinion. Likewise, appraisers must stick to a meticulous 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 guaranteed 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 typically translates to many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she must then take continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Go to list of questions)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

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

Gathering information is one of the primary functions of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is received from a numerous sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.

Why should I hire a licensed appraiser? (Go to list of questions)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're selling your home, 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 home 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? (Go to list of questions)

PMI is an acronym for Private Mortgage Insurance. This additional policy protects the lender if a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Is PMI a part of your monthly mortgage payment?Call Big D Appraisals today at 214-243-8114 or send us an e-mail. Documentation of your home's current value could save you thousands.

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

The first step in most appraisals is the property inspection. 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. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:

Any records 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 agreements or fees .
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
A list of "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean? (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."

Who has rights to 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 certainly entitled to a copy of the report - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

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

Like all things real estate, this is dependent on a home's location. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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