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FIVE STAR APPRAISALS, LLC. has answers to "Frequently Asked Questions"

FIVE STAR APPRAISALS, LLC. is prepared to handle any inquiries you might have about appraisals in HINCKLEY and Medina County. Contact us today to learn how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone require services from FIVE STAR APPRAISALS, LLC.?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Upon completion of the report, what assurance is there that the value indicated is valid?
What goes into an appraiser's certification?
Who employs appraisers?
Where does FIVE STAR APPRAISALS, LLC. get the information used to estimate values in Medina 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
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



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

An appraisal is an estimation that concludes with an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which involves figuring a comparison to similar properties nearby. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a home. One of the least common approaches in appraising homes is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the capital produced by the property.

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

An appraiser forumlates an unprejudiced and well supported opinion of market value, to be used in making real estate transactions. Appraisers show their findings in appraisal reports.


Why would someone require services from FIVE STAR APPRAISALS, LLC.?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
  • To get 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 PMI.
  • To contest high property taxes.
  • To deal with an estate.
  • To offer you an edge when purchasing real estate.
  • To determine a likely property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • 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.
Click here for a more detailed explanation of the process of getting an appraisal.


How is an appraiser different than a home inspector?   (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 accessible structure and systems of a property, 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 services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Simply, they have nothing in common. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be proven by records. Area and architectural costs are also a priority in an appraisal. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp 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 collect only a flat sum for assignments, regardless of their outcome.

What's in an appraisal report?   (Go to list of  questions)

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The purpose of the appraisal.
  • The type of value contained and a definition of the value reported.
  • The effective date of the value opinion.
  • Pertinent property characteristics, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
  • 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 used while working up the job.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the report, what assurance is there that the value indicated is valid?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained an apropos analysis of the data.

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

  • That appraisal services were not conducted in a careless or negligent manner.

  • The final appraisal report was clear, credible and defensible.
There are rigorous education and on the job experience requirements that must be adhered to in order to become a licensed appraiser in Ohio. In addition, appraisers must stick to a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and real world experience. Once an appraiser is 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 employs appraisers?   (Go to list of  questions)

Typically, appraisers are hired by lenders to estimate the value of a home involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does FIVE STAR APPRAISALS, LLC. get the information used to estimate values in Medina County or other areas?   (Go to list of  questions)

One of the primary tasks an appraiser performs is to assimilate property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses 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 is relevant, you'll want an appraisal. If you're 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.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI is short for for Private Mortgage Insurance. It protects the lender in case a borrower doesn't pay on the loan and the value of the property is lower than the balance of 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? Call FIVE STAR APPRAISALS, LLC. today at 330-558-0990. You may be able to cancel your Private Mortgage Insurance payment.

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

The first step in most appraisals is the property 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. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Records on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • Find copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

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."



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 entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.


Are some home improvements more worthwhile than others?   (Go to list of  questions)

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

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%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.

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