John Howard Appraisal Service has answers to "Frequently Asked Questions"

John Howard Appraisal Service is always happy to answer any inquiries you might have about appraisals or real estate in Iredell County. Contact us today to see how we can help solve your valuation problems.

What is an appraisal?
What does an appraiser do?
Why would a person request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
After completing the report, how can I have certainty that the value indicated is legitimate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does John Howard Appraisal Service get the data used to estimate values in Iredell County or other areas?
Why do I need a professional appraisal?
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?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (See list of FAQ's)

The procedure of performing an appraisal report deals with an evaluation which leads to an opinion of value. The real estate appraiser will typically use a number of "approaches," typically three, to draw up the estimation of market value. One of them is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The most common approach in figuring the value of a home is the Sales Comparison Approach which concerns figuring a comparison to comparable properties nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to figure the value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do?   (See list of FAQ's)

An appraiser forumlates a fair and credible determination of market value, in the support of real estate exchanges. Appraisers illustate their professional conclusions in appraisal reports.


Why would a person request a real estate appraisal?   (See list of FAQ's)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal report include:
  • To obtain a loan.
  • To lower your property taxes.
  • To build a case for a homeowner's equity and remove PMI.
  • To contest high property taxes.
  • If you need to take care of an estate.
  • To provide you an edge when purchasing a home.
  • To determine a reasonable 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 require an appraisal on every home.
  • If you are ever involved in a lawsuit.
For a more detailed description of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (See list of FAQ's)

Home inspectors do not generate an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the house from bottom to top. Generally, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, 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)?   (See list of FAQ's)

Simply put, it's like comparing Shakespeare to reality TV. What the CMA depends on are ill-defined trends. An appraisal relies on comparable sales that can be proven by public record. The appraisal report will also include area and construction values. A CMA delivers a "ball park 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 have a true grasp of the market or valuation concepts. A certified, state licensed professional who made a career on valuing homes in and around Iredell County is behind 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 accept a flat sum for assignments, regardless of their value conclusion.

What are the contents of an appraisal report?   (See list of FAQ's)

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:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • The type of value reported and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations 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 included in the activity of completing the appraisal.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have certainty that the value indicated is legitimate?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained an apropos analysis of the data.

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

  • That appraisal services were provided in a careful and judicious manner.

  • The final appraisal report was transparent, credible and conclusive.
To become a state licensed appraiser, there are intense education requirements as well as practical experience that must be logged - all with the end goal of gaining the skills required to render unbiased value opinions. Likewise, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating 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 of Real Estate Appraisers vary from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and real world 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 are an appraiser's customers?   (See list of FAQ's)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does John Howard Appraisal Service get the data used to estimate values in Iredell County or other areas?   (See list of FAQ's)

Compiling information is one of the primary functions of an appraiser. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is received from a number of places. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents. 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 last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal?   (See list of FAQ's)

An appraisal is a valuable tool anytime your home's value is pertinent to a financial decision. If you're 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. For those settling an estate or divorce, an appraisal from John Howard Appraisal Service is the best documentation to ensure assets are split up properly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI protects the lender in case a borrower doesn't pay on the loan and the value 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.

Does your monthly mortgage payment have a lineitem for PMI?Call John Howard Appraisal Service today at 7047996688 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   (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 the appraiser has easy access to the exterior of the house . Trim any landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (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 an oven, or a washer and dryer, if applicable.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements if the property is to be appraised "as complete".

What does "Market Value" mean?   (See list of FAQ's)

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."

Once complete, who actually owns the appraisal report?   (See list of FAQ's)

For mortgage transactions, the lender orders 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 allowed 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 define 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 do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the most value returned from renovating a home comes in the kitchen. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.