Dexter Appraisal Services has answers to "Frequently Asked Questions"


	Dexter Appraisal Services is always happy to answer any questions you might have about appraisals in Lafayette and Tippecanoe County. Contact Dexter Appraisal Services today to learn how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would request your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the appraisal is done, how can I have a guarantee that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who employs appraisers?
Where does Dexter Appraisal Services get the data used to estimate values in Tippecanoe County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (Return to top)

An appraisal is an investigation allowing the appraiser to come to an opinion of value. The appraiser will typically use a few "approaches," typically three, to arrive at the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, minus age and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar nearby properties which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of 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 income produced by the property.

Describe what an appraiser does (Return to top)

An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers demonstrate their professional conclusions in appraisal reports.

What are the reasons someone would request your services? (Return to top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:

If you are applying for a loan.
To reduce your tax burden.
To build a case for a homeowner's equity and remove insurance.
To fight inflated property taxes.
If you need to settle an estate.
To offer you an edge when purchasing real estate.
To find the most probable sales price when listing your home.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you are ever involved in a civil case.

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

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

Appraisers do not do provide home inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the house from basement to top. Usually, a home inspection report will explain the amenities and the requirements 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)

To be blunt, it's like comparing broadband and dial-up. The CMA relies on vague trends in the market. The appraisal is based on similar proven comparable sales. Area and architectural values 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.

The credentials of the person behind the report is frankly the biggest difference between a CMA and an appraisal. 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 has made a career out of valuing properties. 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 collect only a flat sum for assignments, regardless of their outcome.

What does the appraisal report contain? (Return to top)

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

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The purpose of the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Characteristics of the property that have a bearing on the value, including: location, physical description, 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 other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered when completing the appraisal.

For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal is done, how can I have a guarantee that the value indicated is trustworthy? (Return to top)

In the documentation of an appraisal, each appraiser must make sure of the following:

The appraisal used an apropos analysis of the data.

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

That appraisal services were delivered in a careful and cognizant fashion.

That a believable, defensible appraisal report was imparted.

To become a state licensed appraiser, there are intense education requirements as well as practical experience that must be attained - all with the end goal of being able to provide unbiased value opinions. In addition, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

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Licensing and certification requires coursework, tests and experience working under a supervisory appraiser. Once 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 employs appraisers? (Return to top)

Commonly, appraisers are hired by lenders to estimate the value of a house involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Dexter Appraisal Services get the data used to estimate values in Tippecanoe County or other areas? (Return to top)

Compiling information is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is received from a numerous places. To find out about recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely 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 product.

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

Why should I hire a licensed appraiser? (Return to top)

An appraisal is a worthwhile anytime the value of your home is pertinent to some financial decision. If you're selling your home, an appraisal helps you set the most appropriate price. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Dexter Appraisal Services is the best way to ensure assets are split up fairly. Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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 supplementary plan guards the lender in case a borrower doesn't 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 Dexter Appraisal Services today at 765-446-1580 or send us an e-mail. Documentation of your home's current value could save you thousands.

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

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 access 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.
Title policy that describes encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
Most recent real estate tax bill from Tippecanoe and or legal description of the property.

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."

Does the appraisal belong to the bank or the consumer? (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. 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 bundled with all the other closing documents - but is not entitled 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 situations, the appraiser may state 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.

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

The answer to this is different depending upon the location of the home. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, something that may not increase your value would be painting just for the sake of redecorating.