ABC-Appraisals By Colino has answers to "Frequently Asked Questions"


	ABC-Appraisals By Colino is always willing to answer any questions you might have about appraisals or real estate in Schenectady County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons someone would need services from ABC-Appraisals By Colino?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
After completing the appraisal, how can I have assurance that the value indicated is veritable?
How difficult is it to become certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Schenectady County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
What is "Market Value?"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Return to top)

The method of writing an appraisal report deals with an estimation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or estimate. One of them is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves making a comparable analysis to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a residence. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to determine the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (Return to top)

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

What are the reasons someone would need services from ABC-Appraisals By Colino? (Return to top)

There are many reasons to obtain an appraisal from ABC-Appraisals By Colino with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:

If you are applying for a loan.
If you would like to reduce your property tax burden.
To show a homeowner has 30% equity and remove PMI.
To challenge high property taxes.
If you need to settle an estate.
To offer you a leg-up when purchasing a home.
To determine a reasonable sales price when putting your home on the market.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS need an appraisal on every house.
If you ever find yourself in a civil case.

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

Is an appraisal the same as a home inspection? (Return to top)

Appraisers do not do provide residential property inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the house from foundation to rooftop. Generally, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity 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)

Frankly, they share nothing in common. What the CMA relies upon are superficial trends. An appraisal relies on comparable sales that can be verified by public record. The appraisal report will also include area and construction prices. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person creating the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their value conclusion.

What's in an appraisal report? (Return to top)

Every report must reflect a believable estimate of value and will document the following:

The client and whose purposes the appraisal is to serve.
The intended use of the report.
The reason for the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
Any 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 job.

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

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

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

The appraisal contained an appropriate analysis of the information.

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

That appraisal services were done in a careful and cognizant manner.

The final appraisal report was clear, legitimate and conclusive.

To become a state licensed appraiser, there are strenuous education requirements as well as real world experience that must be logged - all with the end goal of being able to provide unbiased value opinions. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires classroom study, tests and practical experience. Once an appraiser is licensed, he/she must then engage in continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

Who do appraisers work for? (Return to top)

Mortgage lenders are an appraiser's most likely client, using their services to ensure real estate involved in a mortgage transaction is adequate collateral for a 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 Schenectady County or other areas? (Return to top)

Compiling information is one of the primary tasks an appraiser engages in. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a many sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers often have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.

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

If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out 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. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (Return to top)

PMI is short for for Private Mortgage Insurance. PMI takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is lower 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 money you keep from dropping your PMI will make up for the price of the appraisal in no time. ABC-Appraisals By Colino stays current with value trends in Glenville and Schenectady County. Contact us today.

Do you need anything from me in advance? (Return to top)

The first step in most appraisals is the home inspection. 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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate 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.

You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:

Any information on the purchase of the property for the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
Title policy that lists encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

What is "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 has rights to the appraisal report? (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 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others? (Return to top)

Like all things real estate, this is dependent on a home's location. 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 weren't far behind, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.