Appraisal Associates of Southern Indiana has answers to "Frequently Asked Questions"

Appraisal Associates of Southern Indiana is happy to handle any questions you might have about appraisals or real estate in Vanderburgh County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to request services from Appraisal Associates of Southern Indiana?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the report, how can I have a guarantee that the value conclusion is veritable?
What are the requirements to be a certified appraiser?
Who hires Appraisal Associates of Southern Indiana
Where does Appraisal Associates of Southern Indiana get the data used to estimate values in Vanderburgh County or other areas?
Why should I hire a licensed appraiser?
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?"
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



What is an appraisal?   (See list of FAQ's)

The procedure of writing an appraisal report consists of an estimation which forms an opinion of value. The appraiser must use a few "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the house, minus depreciation and physical dilapidation, adding the land value. The Sales Comparison Approach deals with searching for similar houses in the vicinity and discovering the value based on comparing those houses to the house in question. Being the most common approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residence. One of the least common approaches in appraising homes 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.

What does an appraiser do?   (See list of FAQ's)

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


What would cause me to request services from Appraisal Associates of Southern Indiana?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • To receive a loan.
  • If you would like to reduce your property tax obligations.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • If you need to take care of an estate.
  • To give you a negotiating tool when purchasing a home.
  • To figure out the most probable sales price when selling real estate.
  • 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.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
If you need a more detailed explanation of the appraisal process, please click here.


How is an appraiser different than a home inspector?   (See list of FAQ's)

Home inspectors do not come to an opinion of value and do not do appraisal reports. A third-party home inspector will judge the structure of the home, from the roof to the bottom. Commonly, a home inspection report will evaluate the amenities and the necessities of the home: 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 visible structures.

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

Simply, they have nothing in common. The CMA relies on indefinite market trends. An appraisal is based on comparable sales that can be verified by records. The appraisal report will also contain location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is who's doing the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce 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 whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their value conclusion.

What's in an appraisal report?   (See list of FAQ's)

Every report should demonstrate a credible value opinion and should document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The reason for the appraisal.
  • The type of value contained 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 factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • 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 all that goes into an appraisal report click here: Sample Appraisal Report


After completing the report, how can I have a guarantee that the value conclusion is veritable?   (See list of FAQ's)

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 substantial errors contained in the appraisal, nor any relevant details left out.

  • That appraisal services were rendered in a careful and judicious fashion.

  • The final appraisal report was transparent, credible and defensible.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that give us the background to produce an unbiased opinion. In addition, appraisers must obey a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who hires Appraisal Associates of Southern Indiana   (See list of FAQ's)

Most of the time, appraisers are called upon by mortgage lenders to render a value opinion on a home involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does Appraisal Associates of Southern Indiana get the data used to estimate values in Vanderburgh County or other areas?   (See list of FAQ's)

One of the primary tasks an appraiser engages in is to collect data. Data can be split into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics 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 could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers routinely have 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 assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.


Why should I hire a licensed appraiser?   (See list of FAQ's)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. 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. 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?   (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy covers the lender in the event a borrower defaults on the loan and the market price of the house is less than the balance of the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

Does your monthly mortgage payment include a fee for PMI?Call Appraisal Associates of Southern Indiana today at 812-421-1410 or send us an e-mail. A new appraisal could save you thousands.

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

We start 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. 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 bushes so we can be free to get an accurate measurement of exterior walls.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if readily available).
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Information on "Homeowners Associations" or condominium covenants and 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."



Does the appraisal belong to the bank or the consumer?   (See list of FAQ's)

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 appraisal - 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 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.


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

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 best ROI 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, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.