Mountain Residential Appraisal has answers to "Frequently Asked Questions"


	Mountain Residential Appraisal is always eager to elaborate on any inquiries you might have about appraisals or real estate in Elmhurst and Dupage County. Feel free to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would need your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the assignment is done, what assurance is there that the final number is valid?
What are the requirements to be a certified appraiser?
Who are an appraiser's customers?
Where does Mountain Residential Appraisal get the information used to estimate values in Dupage County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What is "Market Value?"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?

Describe an appraisal (See list of FAQ's)

An appraisal is an investigation allowing the appraiser to come to an opinion of value. This opinion or estimate is arrived at through a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves discerning what the improvements would cost without physical deterioration, adding the land value. The Sales Comparison Approach involves searching for comparable houses nearby and figuring out the value based on comparing those houses to the property being appraised. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.

Describe what an appraiser does (See list of FAQ's)

An appraiser provides an objective and well supported determination of market value, in the support of real estate exchanges. Appraisers exhibit their expert analysis in appraisal reports.

What are the reasons a person would need your services? (See list of FAQ's)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:

If you are applying for a loan.
To reduce your tax burden.
To show a homeowner has 30% equity and remove insurance.
To contest high property taxes.
To settle an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out a reasonable price when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every property.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

What is the difference between an appraisal and a home inspection? (See list of FAQ's)

Appraisers do not do perform home inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the house from bottom to attic. The stereotypical property inspector's report will include an evaluation of the condition of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)? (See list of FAQ's)

Frankly, they have nothing in common. What the CMA depends on are superficial trends. The appraisal is reliant on specific valid comparable sales. The appraisal report will also contain neighborhood and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

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, create CMA's. A certified, state licensed professional who bases a career on valuing real estate in and around Dupage County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.

What does the appraisal report contain? (See list of FAQ's)

Each report must indicate a believable value opinion and should identify the following:

Who engaged the appraiser 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 appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical attributes, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed 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 considered when completing the job.

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

Once the assignment is done, what assurance is there that the final number is valid? (See list of FAQ's)

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

The appraisal contained analysis of the data.

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

That appraisal services were not carried out in a careless or negligent fashion.

The final appraisal report was easy to explain, legitimate and defensible.

To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be logged - all with the objective of gaining the skills required to provide unbiased value opinions. Plus, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(See list of FAQ's) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he/she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (See list of FAQ's)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Mountain Residential Appraisal get the information used to estimate values in Dupage County or other areas? (See list of FAQ's)

One of the most important things an appraiser does is to collect data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a many places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

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.

Why do I need a professional appraisal? (See list of FAQ's)

An appraisal is a valuable tool anytime the value of your home is pertinent to some financial decision. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; 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. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that? (See list of FAQ's)

PMI is short for for Private Mortgage Insurance. It guards the lender if a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Mountain Residential Appraisal when it comes to analyzing real estate appreciation in Elmhurst and Dupage County. Contact us today.

How do I get ready for the appraiser? (See list of FAQ's)

We begin with an inspection of the property. 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 condition of its features. 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 landscaping and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to 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:

Information on the latest purchase of the property in the last three years.
A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Brag sheet that lists major home improvements and enhancements, 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).
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

What is "Market Value?" (See list of FAQ's)

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? (See list of FAQ's)

For mortgage transactions, the lender orders 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 entitled to a copy of the report - 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.

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 stipulated otherwise, the home owner can use the appraisal for any purpose.

I want to get more for my house. Where should I spend money renovating? (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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