Valuation One, LLC has answers to "Frequently Asked Questions"

Valuation One, LLC is prepared to address any questions you might have about appraisals in Newburgh and Warrick County. Contact us today to talk about how we can help you with your valuation problems.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Once the appraisal is done, how can I have certainty that the final number is valid?
What does it mean for an appraiser to be licensed?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Warrick County or other areas?
How can a licensed appraiser help 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?
How can I get the most ROI out of home improvements?



Describe an appraisal   (Return to top)

An appraiser provides an estimation that generates an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a home; it involves finding what the improvements would cost less physical deterioration, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves figuring a comparison to similar homes nearby. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.

Describe what an appraiser does   (Return to top)

An appraiser forumlates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers present their professional conclusions in appraisal reports.


What are the reasons a person would need a real estate appraisal?   (Return to top)

There are many reasons to obtain an appraisal from Valuation One, LLC with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
  • To get a loan.
  • If you would like to reduce your property tax obligations.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To challenge inflated property taxes.
  • If you need to settle an estate.
  • To provide you a leg-up when purchasing real estate.
  • To determine an honest sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process of getting an appraisal.


What is the difference between an appraisal and a home inspection?   (Return to top)

Appraisers do not do complete house inspections and are not home inspectors. A third-party home inspector will inspect the structure of the home, from the top to the foundation. The stereotypical property inspector's report will include an evaluation of the integrity of the home'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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Return to top)

Frankly, it's like comparing broadband and dial-up. The CMA relies on indistinct market trends. Appraisals use comparable sales which are verifiable resources. Location and architectural values are also a priority 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.

Who's creating the report is frankly 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 made a career on valuing properties in and around Warrick County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their outcome.

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

Each appraisal should indicate a credible value opinion and will clearly state the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The purpose of the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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.
  • What was involved in the activity of completing the assignment.
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 certainty that the final number is valid?   (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 analysis of the data.

  • Whether individually or collectively, there were no critical errors contained in the appraisal, nor any material details left out.

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

  • The final appraisal report was clear, credible and defensible.
To become a state licensed appraiser, we must meet extensive education and experience requirements that enable us to formulate an unbiased opinion. Plus, appraisers must obey a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Return to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once licensed, he or 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 hires an appraiser?   (Return to top)

Commonly, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

Compiling data is one of the primary roles of an appraiser. Data can be described as either Specific or General. Specific data is 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 number of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers often need 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 product.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

How can a licensed appraiser help me?   (Return to top)

An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Valuation One, LLC is the best documentation to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. PMI covers the lender in case a borrower doesn't pay on the loan and the market price of the home is lower 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.

Does your monthly loan payment have a lineitem for PMI?Call Valuation One, LLC today at (812) 490-4999 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)

We start with an inspection of the home. 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 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 exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • A survey or plot map of the property and building (if available).
  • List of personal property to be sold with the home.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades 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.

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)

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 situations, the appraiser may define 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?   (Return to top)

This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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