Druid City Appraisals, LLC has answers to "Frequently Asked Questions"


	Druid City Appraisals, LLC is willing to address any inquiries you might have about appraisals or real estate in Tuscaloosa County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would someone request your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
After completing the report, how can I have a guarantee that the value indicated is veritable?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does Druid City Appraisals, LLC get the information used to estimate values in Tuscaloosa 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?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

What is an appraisal? (Back to top)

The process of creating an appraisal report consists of an estimation which forms an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or valuation. The Cost Approach is one of the approaches that appraisers use to find value; it involves discerning what the improvements would cost without physical degradation, adding the land value. The Sales Comparison Approach involves searching for similar homes in the vicinity and finding value based on making a comparison of those properties to the home being investigated. Being the most common approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do? (Back to top)

An appraiser generates an unprejudiced and well justified assessment of market value, to be used in making real estate transactions. Appraisers reveal the details of their professional analysis in appraisal reports.

Why would someone request your services? (Back to top)

There are many reasons to order 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.
To reduce your property taxes.
To build a case for a homeowner's equity and remove PMI.
To contest inflated property taxes.
To settle an estate.
To offer you a negotiating tool when purchasing a home.
To determine an honest property value when selling your home.
To protect 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 civil case.

If you need more information regarding the appraisal process, please click here.

How is an appraiser different than a home inspector? (Back to top)

Appraisers do not do provide residential property inspections and are not home inspectors. A third-party home inspector will inspect the structure of the house, from the roof to the foundation. Usually, a home inspection report will evaluate the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Back to top)

Simply, they share nothing in common. What the CMA relies upon are ill-defined trends. The appraisal relies on similar verifiable comparable sales. Location and architectural costs are also important in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased voice, with no vested interest in the property's value, unlike the agent, whose income is tied to the value of the home.

What's in an appraisal report? (Back to top)

Each appraisal must demonstrate a supported value opinion and will document the following:

The client and other intended users.
How the appraisal is supposed to be used.
The purpose of the assignment.
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 factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
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 entailed in the process of completing the job.

For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have a guarantee that the value indicated is veritable? (Back to top)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

The appraisal contained an appropriate analysis of the data.

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

That appraisal services were provided in a careful and cognizant manner.

The final appraisal report was transparent, credible and not easily discredited.

To become a state licensed appraiser, we must fulfill intense education and experience requirements that prepare us to produce an unbiased opinion. In addition, appraisers must obey a stringent 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 guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he/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 engages the services of appraisers? (Back to top)

Typically, appraisers are employed by mortgage lenders to estimate the value of a house involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Druid City Appraisals, LLC get the information used to estimate values in Tuscaloosa County or other areas? (Back to top)

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

General data is collected from a variety of places. To look up recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

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

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

An appraisal is a valuable tool whenever the value of your home is relevant to some financial decision. When 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. 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. Knowing its true value is essential to making wise financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Back to top)

PMI is an acronym for Private Mortgage Insurance. It protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes 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.


	Does your monthly loan payment have a lineitem for PMI?Call Druid City Appraisals, LLC today at 2052397846 or send us an e-mail. A new appraisal could save you thousands.

Does the appraiser need anything from the homeowner in advance? (Back to top)

The first step in most appraisals is the home 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. On the home's interior, make sure it is clutter free and that 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 outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Any records on the purchase of the property for the last three years.
A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

What is "Market Value?" (Back 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? (Back to top)

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 report - it's usually bundled with all the other closing documents - but is not allowed 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 scenarios, 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 do whatever they want with the appraisal.

How can I get the most ROI out of home improvements? (Back to top)

Like all things real estate, this is dependent on a home's location. 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 weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.