Bain & Associates, Inc. Real Estate Appraisers has answers to "Frequently Asked Questions"


	Bain & Associates, Inc. Real Estate Appraisers is always eager to handle any questions you might have about appraisals or real estate in Plano and Collin County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would someone request a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
After completing the report, how can I have assurance that the value conclusion is veritable?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Collin 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?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Which home renovations add the most to the price?

Describe an appraisal (Return to top)

An appraiser performs an estimation that leads to an opinion of value. The real estate appraiser will typically use a number of "approaches," typically three, to conclude the estimation of market value. One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to similar homes close by. The Sales Comparison Approach is normally the most accurate and best indicator of value for a home. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

Describe what an appraiser does (Return to top)

An appraiser provides a fair and credible opinion of market value, in the support of real estate exchanges. Appraisers show their expert findings in appraisal reports.

Why would someone request a real estate appraisal? (Return to top)

There are a lot of reasons to obtain an appraisal from Bain & Associates, Inc. Real Estate Appraisers with the usual reason being real estate and mortgage transactions. Some other reasons for getting an report include:

If you are applying for a loan.
To lower your tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To contest high property taxes.
If you need to settle an estate.
To provide you an edge when purchasing real estate.
To find the most probable price when selling real estate.
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.

Click here for a more extensive explanation of the process of getting an appraisal.

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

Appraisers do not do complete house inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the home from foundation to top. For the most part, a home inspection report will discuss the amenities and the necessities of the property: 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 other visible structures.

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

To be blunt, it's like comparing Shakespeare to reality TV. What the CMA relies upon are vague trends. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also contain area and building prices. 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 who's creating the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report? (Return to top)

The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The reason for the assignment.
The type of value contained and a definition of that value.
The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, 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 the like.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work used when completing the appraisal.

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

After completing the report, how can I have assurance that the value conclusion is veritable? (Return to top)

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

The appraisal contained a suitable analysis of the information.

Whether individually or collectively, there were no significant 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 defensible.

To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be attained. In addition, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers? (Return to top)

Typically, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Collin County or other areas? (Return to top)

One of the main activities of an appraiser is to gather data. Data can be classified as either Specific or General. Specific data is 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. To research recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

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

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When 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 people settling an estate or divorce, an appraisal from Bain & Associates, Inc. Real Estate Appraisers is the best way to ensure assets are split up evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. This added policy covers the lender in case a borrower defaults on the loan and the value of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The amount you keep from dropping your PMI will make up for the price of the appraisal in a matter of months. Bain & Associates, Inc. Real Estate Appraisers has years of experience with real estate value trends in Plano and Collin County. Contact us today.

How do I get ready for the appraiser? (Return to top)

We start with an inspection of the property. 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, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, 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:

Records on the latest purchase of the property in the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
Most recent real estate tax bill and or legal description of the property.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

How does an appraiser define "Market Value"? (Return 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 actually owns the appraisal report? (Return to top)

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 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.

It's different when it's the homeowner engaging 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 stated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (Return to top)

It really depends on the market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

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 are right up there with kitchens, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.

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