Southern Appraisal, LLC has answers to "Frequently Asked Questions"


	Southern Appraisal, LLC is willing to elaborate on any questions you might have about appraisals in Jefferson County. Contact Southern Appraisal, LLC today to learn how we can help you with your specific valuation problems.

What is an appraisal?
Describe what an appraiser does
What would cause me to request your services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Upon completion of the report, how can I have confidence that the value conclusion is legitimate?
How are appraisers certified?
Who hires an appraiser?
Where does Southern Appraisal, LLC get the data used to estimate values in Jefferson 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?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "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? (Go to list of questions)

The procedure of performing an appraisal deals with an investigation which leads to an opinion of value. This opinion or estimate is found through a formal method that typically uses three "common approaches to value". One of the processes is the Cost Approach - which is how much capital would be required 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 concerns finding a comparison to other similar nearby properties which have recently sold. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value 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 generated by the property.

Describe what an appraiser does (Go to list of questions)

An appraiser generates a fair and credible determination of market value, in the support of real property exchanges. Appraisers summarize their expert conclusions in appraisal reports.

What would cause me to request your services? (Go to list of questions)

There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:

If you are applying for a loan.
To lower your property taxes.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To challenge inflated property taxes.
To settle an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out a likely property value when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Because a government agency such as the IRS requires it.
If you ever find yourself in a civil case.

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

Is an appraisal the same as a home inspection? (Go to list of questions)

Appraisers do not do complete house inspections and are not home inspectors. An inspection is a third-party investigation of the available structure and systems of a house, from the roof to the foundation. The general home inspector's report will contain 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 visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal? (Go to list of questions)

Frankly, it's like comparing opera to country. The CMA utilizes market trends to conduct most of their business. An appraisal utilizes comparable sales that can be verified by records. In addition, the appraisal verifies other factors like condition, location and construction costs. A CMA delivers 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 who's doing the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Alabama licensed professional who made their livelihood on valuing homes in and around Jefferson County is behind the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the value of the home.

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

Each report must reflect a credible estimate of value and will clearly state the following:

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the real property interest valued, 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.
The scope of work considered while working up the appraisal.

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

Upon completion of the report, how can I have confidence that the value conclusion is legitimate? (Go to list of questions)

In communicating an appraisal report, each appraiser must ensure the following:

That the information analysis utilized in the appraisal was suitable.

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

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

The final appraisal report was transparent, sound and defensible.

There are rigorous education and real world experience requirements that must be adhered to in order to achieve the title of "licensed appraiser" in Alabama. In addition, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification takes coursework, tests and practical experience. Once licensed, he/she must then complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who hires an appraiser? (Go to list of questions)

Typically, appraisers are hired by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Southern Appraisal, LLC get the data used to estimate values in Jefferson County or other areas? (Go to list of questions)

Collecting data is one of the main things an appraiser performs. Data can be described as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is received from a number of places. To look up recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers often need 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 product.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

Why do I need a professional appraisal? (Go to list of questions)

If you're involved in some sort of financial decision and the value of your home matters, you'll want an appraisal. 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. A home 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 is the common abbreviation for for Private Mortgage Insurance. It takes care of the lender if a borrower defaults on the loan and the market price of the property is less than what the borrower still owes on 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.


	The savings from getting rid of your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than Southern Appraisal, LLC when it comes to analyzing real estate appreciation in Birmingham and Jefferson County. Contact us today.

Should I do anything in advance of the appraisal appointment (Go to list of questions)

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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any bushes and move any items that would get in our way while we measure the structure. Indoors, make sure we can easily access appliances 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:

A survey or plot map of the property and building (if readily available).
Written property agreements, such as a maintenance easement for a shared driveway.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser define "Market Value"? (Go to list of questions)

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? (Go to list of questions)

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 included 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 define the purpose of the appraisal; 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.

I want to get more for my house. Where should I spend money renovating? (Go to list of questions)

Like all things real estate, this is dependent on a home's location. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 boost the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.