Davidson & Associates has answers to "Frequently Asked Questions"


	Davidson & Associates is eager to answer any inquiries you might have about appraisals in Forsyth County. Contact Davidson & Associates today to learn how we can help solve your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Once the assignment has been completed, how can I have a guarantee that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Forsyth 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?
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

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

The appraisal process is an estimation that produces an opinion of value. The appraiser will use a several "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find the value of a property; it involves discerning what the improvements would cost without physical degradation, adding the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar nearby properties which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.

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

An appraiser produces a professional, unbiased assessment of market value, often in the context of a real estate sale. Appraisers reveal the details of their expert investigation in appraisal reports.

What would cause me to request a real estate appraisal? (See list of FAQ's)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:

To receive a loan.
To reduce your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To challenge inflated property taxes.
If you need to take care of an estate.
To give you an edge when purchasing a home.
To figure out a likely sales 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 civil case.

For a more extensive 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 figure out an opinion of value and are not appraisers. A third-party home inspector will investigate the structure of the home, from the top to the foundation. The usual home inspector's report will include 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 visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal? (See list of FAQ's)

To be blunt, it's like comparing sugar and saccharin. The CMA uses market trends to generate most of their business. Appraisals use comparable sales which are valid resources. In addition, the appraisal looks at other factors like condition, area and building costs. 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.

Who's creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who has formed their livelihood on valuing homes in and around Forsyth County is behind 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? (See list of FAQ's)

The main purpose of an appraisal report 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 whose purposes the appraisal is to serve.
The intended use of the report.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, 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, permanent equipment installations and even intangible items.
Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
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 in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, how can I have a guarantee that the value indicated is trustworthy? (See list of FAQ's)

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

That the information analysis utilized in the appraisal was appropriate.

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

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

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

To become a state licensed appraiser, we must meet extensive education and experience requirements that give us the background to formulate an unbiased opinion. Likewise, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting 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 vary from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he/she is required to complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers? (See list of FAQ's)

Most of the time, appraisers are called upon by lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Forsyth County or other areas? (See list of FAQ's)

Gathering data is one of the primary functions of an appraiser. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a numerous places. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents. Appraisers often have 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 collective knowledge gained from doing assignments for other properties in the same market.

What can a full appraisal do for me? (See list of FAQ's)

An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. If you're selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it? (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. This additional plan covers the lender in the event a borrower is unable to pay on the loan and the value of the property is less than the loan balance. 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.


	Is PMI a part of your monthly mortgage payment?Call Davidson & Associates today at (336) 765-5502 or send us an e-mail. A current appraisal could save you thousands.

How do I get ready for the appraiser? (See list of FAQ's)

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

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

Any information on the purchase of the property for the last three years.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning 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? (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."

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. 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 appraisal - 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate 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.

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

The added value of a particular amenity truly depends on the local market. 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. 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 were second, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.