LRS & Associates has answers to "Frequently Asked Questions"


	LRS & Associates is ready to handle any concerns you might have about appraisals in Pasco County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would a person request a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Upon completion of the appraisal, how can I have certainty that the value conclusion is valid?
How difficult is it to become certified?
Who do appraisers work for?
Where does LRS & Associates get the data used to estimate values in Pasco County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

What is an appraisal? (Return to top)

An appraiser performs an evaluation that generates an opinion of value. This opinion or estimate is arrived at by a formal process that commonly uses three "common approaches to value". One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the house, less the depreciation and physical dilapidation, adding the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which deals with making a comparison to similar houses close by. The Sales Comparison Approach is normally the most definitive and best indicator of value for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the money produced by the property.

What does an appraiser do? (Return to top)

An appraiser generates an objective and well substantiated determination of market value, in the support of real estate transactions. Appraisers present their professional investigation in appraisal reports.

Why would a person request a real estate appraisal? (Return to top)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an report include:

To get a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight high property taxes.
If you need to take care of an estate.
To offer you a negotiating tool when purchasing real estate.
To figure out an honest 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.
Because an official agency such as the IRS requires it.
It's possible you could be involved in a lawsuit - an appraisal will help.

For a more extensive explanation of the appraisal process click here.

How is an appraiser different than a home inspector? (Return to top)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will investigate the structure of the property, from the roof to the foundation. Commonly, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, 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.

My agent performed a CMA for me. Is that the same as an appraisal? (Return to top)

Honestly, they have nothing in common. The CMA utilizes market trends to generate most of their business. The appraisal relies on specific proven comparable sales. In addition, the appraisal verifies other factors like condition, area and building prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, Florida licensed professional who has formed a career on valuing properties in and around Pasco County creates the appraisal. 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 collect only a flat fee for assignments, regardless of their value conclusion.

What does the appraisal report contain? (Return to top)

The main objective of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:

Who engaged the appraiser and other intended users.
The intended use of the report.
The appraisal's purpose.
The type of value contained and a definition of the value reported.
The effective date of the appraisal.
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
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.
What was included in the activity of completing the job.

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

Upon completion of the appraisal, how can I have certainty that the value conclusion is valid? (Return to top)

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

That the information analysis utilized in the appraisal was suitable.

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

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

That a trustworthy, substantiated appraisal report was conferred.

To become a state licensed appraiser, there are education requirements as well as real world experience that must be attained. Plus, appraisers must follow a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires coursework, tests and practical experience. Once licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for? (Return to top)

Mortgage lenders are an appraiser's typical customer, needing 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 hire appraisers for divorce and estate settlements.

Where does LRS & Associates get the data used to estimate values in Pasco County or other areas? (Return to top)

One of the most important tasks an appraiser must accomplish is to collect data. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is collected from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office 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 last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.

What can a full appraisal do for me? (Return to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal helps you set the most appropriate price. 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 an acronym for Private Mortgage Insurance. It guards the lender in case a borrower doesn't pay on the loan and the market price of the house is lower than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Did you secure your mortgage with less than 20% down? Contact LRS & Associates today at 7278562272. You may be able to get rid of your Private Mortgage Insurance premium.

How do I get ready for the appraiser? (Return to top)

We begin 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 condition of its amenities. Inside, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

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

Any records on the purchase of the property for the last three years.
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
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 if the property is to be appraised "as complete".

What does "Market Value" mean? (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."

Does the appraisal belong to the bank or the consumer? (Return to top)

For mortgage transactions, the lender requests 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 certainly entitled to a copy of the report - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly. 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 noted otherwise, the home owner can use the appraisal for any purpose.

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

It really depends on the market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

As a rule, the most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms are right up there with kitchens, 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.