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Duke Appraisal Service has answers to "Frequently Asked Questions"

Duke Appraisal Service is always eager to answer any inquiries you might have about appraisals or real estate in Nashville and Davidson County. Contact Duke Appraisal Service today to see how we can help solve your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
Why would I need a real estate appraisal?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
After completing the report, what guarantee is there that the final number is accurate?
What are the requirements to be a certified appraiser?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in Davidson County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
What does "Market Value" mean?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

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

The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured through the use of a formal method that generally utilizes three "common approaches to value". The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves discerning what the improvements would cost less physical degradation, adding the land value. Another of the processes is the Sales Comparison Approach - which involves making a comparable analysis to other similar nearby properties which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a home. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to figure the market value of a property based on what an investor would pay based on the capital produced by the building.

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

An appraiser provides a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers exhibit their professional investigation in appraisal reports.

Why would I need a real estate appraisal?   (Go to list of  questions)

There are many reasons to get an appraisal from Duke Appraisal Service with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To contest improperly assessed property taxes.
  • To deal with an estate.
  • To offer you a leg-up when purchasing real estate.
  • To determine a reasonable sales price when listing your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
For a more detailed explanation of the appraisal process click here.

How is an appraisal different than a home inspection?   (Go to list of  questions)

The appraiser is not a home inspector and does not do a full home inspection. A third-party home inspector will judge the structure of the home, from the top to the foundation. For the most part, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, 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?   (Go to list of  questions)

Frankly, it's like comparing Shakespeare to reality TV. The CMA depends on vague local market trends. An appraisal utilizes comparable sales that can be validated by public record. Location and building prices 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 most significant factor is who's behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made a career on valuing properties in and around Davidson County creates the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

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

Each appraisal must reflect a supported value opinion and will identify 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 the value reported.
  • The effective date of the appraisal.
  • Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • All 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 included 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 report, what guarantee is there that the final number is accurate?   (Go to list of  questions)

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

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

  • That appraisal services were delivered in a careful and conscientious fashion.

  • That a solid, defensible appraisal report was conferred.
To become a state licensed appraiser, we must fulfill extensive education and experience requirements that give us the background to produce an unbiased opinion. In addition, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Go to list of  questions) Licensing and certification takes coursework, tests and practical experience. Once an appraiser is licensed, he/she is required to take continuing education courses so the license stays up to date. 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, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

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

One of the primary things an appraiser does is to compile data. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a many places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers often have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assembles 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)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal will help you determine the most appropriate price. 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.

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

PMI is short for for Private Mortgage Insurance. This supplementary policy guards the lender in case a borrower defaults on the loan and the market price of the house is lower than what is owed 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.

Is PMI a lineitem in your monthly mortgage payment?Call Duke Appraisal Service today at (615) 351-3853 or send us an e-mail. A current appraisal could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Go to list of  questions)

The first step in most appraisals is the property 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. Inside, pick up any clutter and make sure we can get to 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.

You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Any paperwork, 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 copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • Most recent real estate tax bill and or legal description of the property.

What does "Market Value" mean?   (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 actually owns the appraisal report?   (Go to list of  questions)

For mortgage transactions, the lender requests 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 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 situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (Go to list of  questions)

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