Strawberry Farm Appraisals has answers to "Frequently Asked Questions"


	Strawberry Farm Appraisals is ready to talk to you about any questions you might have about appraisals in New Douglas and Madison County. Contact us today to talk about how we can help you with your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons someone would request a real estate appraisal?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
After completing the report, how can I have assurance that the value indicated is veritable?
What does it mean for an appraiser to be licensed?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Madison 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?
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Return to top)

An appraisal is an inspection leading to an opinion of value. The appraiser will typically use a few "approaches," typically three, to arrive at the estimation of market value. One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. 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 income generated by the property.

Describe what an appraiser does (Return to top)

An appraiser offers an unbiased and well supported opinion of market value, in the support of real estate transactions. Appraisers exhibit their expert findings in appraisal reports.

What are the reasons someone would request a real estate appraisal? (Return to top)

There are many reasons to obtain an appraisal from Strawberry Farm Appraisals with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:

If you are applying for a loan.
To lower your property taxes.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To challenge improperly assessed property taxes.
To settle an estate.
To offer you a negotiating tool when purchasing real estate.
To figure out a reasonable sales price when putting your home on the market.
To protect 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 have to deal with being in a lawsuit - an appraisal will help.

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

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

The appraiser is not a home inspector and does not do a full home inspection. The purpose of a home inspection is to evaluate the structure of the house from foundation to top. The stereotypical property inspector's report will contain an evaluation of the integrity 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? (Return to top)

Frankly, it's like comparing opera to country. The CMA uses market trends to conduct most of their business. An appraisal is based on comparable sales that can be proven by public record. The appraisal report will also contain location and construction costs. 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.

The person behind the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. A certified, state licensed professional who bases their livelihood on valuing homes in and around Madison County is behind the appraisal. 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 accept a flat fee for assignments, regardless of their outcome.

What are the contents of an appraisal report? (Return to top)

Each report must demonstrate a credible value opinion and should identify the following:

The client and other intended users.
The intended use of the appraisal.
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.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
All 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 in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

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

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:

That the information analysis utilized in the appraisal was appropriate.

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

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

That a believable, defensible appraisal report was imparted.

There are rigorous classroom and real world experience requirements that must be satisfied in order to achieve the title of "licensed appraiser" in Illinois. Likewise, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he or she must then engage in continuing education courses so the license remains current. 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, using their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Madison County or other areas? (Return to top)

One of the most important activities of an appraiser is to compile property data. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a many places. Local Multiple Listing Services (MLS) have data 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. Appraisers routinely 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 service.

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

What can a full appraisal do for me? (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. 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 home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. This additional policy covers the lender in case a borrower defaults on the loan and the value of the property is lower than the loan balance. 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 amount you keep from dropping your PMI will make up for the price of the appraisal in no time. Strawberry Farm Appraisals is in the business of tracking real estate value trends in New Douglas and Madison County. Contact us today.

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

The first step in most appraisals is the property inspection. 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 amenities. 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 shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to items like furnaces and water heaters.

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

Records on the latest purchase of the property in the last three years.
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, your septic system and wells.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

How does an appraiser define "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 actually owns the appraisal report? (Return to top)

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

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

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

The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 were second, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.