Accurate Real Estate Appraisals has answers to "Frequently Asked Questions"

Accurate Real Estate Appraisals is willing to handle any concerns you might have about appraisals or real estate in Mower County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to need services from Accurate Real Estate Appraisals?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Upon completion of the report, how can I have certainty that the value indicated is accurate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does Accurate Real Estate Appraisals get the data used to estimate values in Mower 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?
What does "Market Value" mean?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



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

The appraisal process is an evaluation that generates an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the processes is the Sales Comparison Approach - which involves making a comparison to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a residence. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

What does an appraiser do?   (Go to list of  questions)

An appraiser generates a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers illustate their professional findings in appraisal reports.


What would cause me to need services from Accurate Real Estate Appraisals?   (Go to list of  questions)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
  • To receive a loan.
  • If you would like to lower your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To fight improperly assessed property taxes.
  • To handle an estate.
  • To provide you an edge when purchasing real estate.
  • To find the most probable sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every house.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
If you need more information about the appraisal process, please click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

Home inspectors do not generate an opinion of value and do not do appraisal reports. A third-party home inspector will evaluate the structure of the home, from the roof to the bottom. For the most part, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

To be blunt, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to create most of their business. Appraisals use comparable sales which are valid resources. Location and architectural prices are also a priority in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. 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 accept a previously agreed upon fee for work they perform, regardless of their outcome.

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

Each appraisal must reflect a credible estimate of value and will identify the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the appraisal.
  • 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!)
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations 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 considered when completing the appraisal.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the report, how can I have certainty that the value indicated is accurate?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal contained a suitable analysis of the data.

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

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

  • That a trustworthy, defensible appraisal report was imparted.
There are intense classroom and experience requirements that must be adhered to in order to achieve the status of "licensed appraiser" in Minnesota. Plus, appraisers must follow a meticulous industry code of ethics and respect 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).


   (Go to list of  questions) Licensing and certification is achieved through classroom study, 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 engages the services of appraisers?   (Go to list of  questions)

Mortgage lenders are an appraiser's typical customer, requiring their services to ensure real estate 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 Accurate Real Estate Appraisals get the data used to estimate values in Mower County or other areas?   (Go to list of  questions)

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

General data is collected from a number of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.


How can a licensed appraiser help me?   (Go to list of  questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house 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?   (Go to list of  questions)

PMI stands for Private Mortgage Insurance. PMI protects the lender if a borrower defaults on the loan and the market price 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 cancelling your PMI will make up for the price of the appraisal in a matter of months. Accurate Real Estate Appraisals is a name you can trust when it comes to real estate value trends in Grand Meadow and Mower County. Contact us today.

How do I get ready for the appraiser?   (Go to list of  questions)

We start with an inspection of the home. 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 status 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 (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • Records on the latest purchase of the property in the last three years.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • A list of "proposed" improvements if the property is to be appraised "as complete".

What does "Market Value" mean?   (Go to list of  questions)

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?   (Go to list of  questions)

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 appraisal - 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 cases, the appraiser may stipulate 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?   (Go to list of  questions)

This really depends on where the home is. 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 were second, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.