Southern Kentucky Appraisals has answers to "Frequently Asked Questions"


	Southern Kentucky Appraisals is always prepared to reply to any questions you might have about appraisals in Warren County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to request your services?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the appraisal has been delivered, how can I have confidence that the final number is valid?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Warren 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?
Do you need anything from me in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?

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

An appraisal is an inspection allowing the appraiser to come to an opinion of value. This opinion or estimate is discerned by a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the approaches that appraisers use to find the value of a home; it involves figuring what the improvements would cost minus physical deterioration, adding the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which deals with making a comparison to comparable houses close by. Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to figure the value of a property based on what an investor would pay based on the income produced by the property.

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

An appraiser offers an objective and well justified determination of market value, often in the context of a real estate purchase. Appraisers illustate their expert conclusions in appraisal reports.

What would cause me to request your services? (Go to list of questions)

There are many reasons to order an appraisal from Southern Kentucky Appraisals with the most common reason being real estate and mortgage transactions. Some other reasons for getting an report include:

To receive a loan.
To lower your tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To challenge high property taxes.
If you need to settle an estate.
To provide you a negotiating tool when purchasing a home.
To determine a reasonable property value when selling your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every home.
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.

Is an appraisal the same as a home inspection? (Go to list of questions)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a home, from the roof to the bottom. The stereotypical property inspector's report will contain an evaluation of the integrity of the house's heating system, 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.

Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)

Simply put, it's like comparing broadband and dial-up. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are valid resources. The appraisal report will also contain neighborhood and construction values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is hands down the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who has formed their livelihood on valuing homes in and around Warren County creates the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the value of the home.

What can I expect to see in my appraisal report? (Go to list of questions)

Every appraisal should demonstrate a credible value opinion and will identify the following:

The client and other intended users.
The intended use of the report.
The reason for the appraisal.
The type of value contained and a definition of the value reported.
The effective date of the appraisal.
Pertinent property attributes, 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 factors.
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 while working up the assignment.

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

Once the appraisal has been delivered, how can I have confidence that the final number is valid? (Go to list of questions)

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

The appraisal used an apropos analysis of the data.

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

That appraisal services were delivered in a careful and judicious manner.

That a believable, substantiated appraisal report was imparted.

To become a state licensed appraiser, there are intense education requirements as well as practical experience that must be attained. Likewise, appraisers must obey a stringent industry code of ethics and comply with 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).

(Go to list of questions) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and real world 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 are an appraiser's customers? (Go to list of questions)

Most of the time, appraisers are called upon by lenders to estimate the value of property involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

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

One of the most important tasks an appraiser must accomplish is to assimilate data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a numerous places. To find out about recent sales to be used as "comps", we typically use the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents. Appraisers routinely need 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 assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

What can a full appraisal do for me? (Go to list of questions)

An appraisal is a worthwhile whenever the value of your home is relevant to a financial decision. For those selling a home, you'll want to determine a 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. When buying, be sure you're not overpaying by commissioning 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.

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

PMI is the common abbreviation for for Private Mortgage Insurance. It covers the lender if a borrower doesn't pay on the loan and the value of the property is lower than the balance of 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.


	The amount you keep from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Southern Kentucky Appraisals when it comes to analyzing real estate appreciation in Bowling Green and Warren County. Contact us today.

Do you need anything from me in advance? (Go to list of questions)

We begin with an inspection of the home. During this process, the appraiser 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any bushes and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

A plot plan or survey of the house and land (if readily available).
List of personal property to be sold with the building.
Title policy that lists encroachments or easements.
Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

How does an appraiser define "Market Value"? (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 has rights to the appraisal report? (Go to list of questions)

For mortgage transactions, the lender requests 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 certainly entitled to a copy of the report - 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (Go to list of questions)

The answer to this is different depending upon the location of the home. 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.

As a rule, the most value returned from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.