Wells Appraisal Service has answers to "Frequently Asked Questions"


	Wells Appraisal Service is always happy to talk to you about any inquiries you might have about appraisals or real estate in Pulaski County. Contact Wells Appraisal Service today to learn how we can help solve your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would require your services?
How is an appraisal different than 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?
Once the report is done, how can I have confidence that the value conclusion is valid?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does Wells Appraisal Service get the data used to estimate values in Pulaski County or other areas?
What can a full appraisal do for me?
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 inspection
Define "Market Value"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?

Define the term "Appraisal" (List of questions)

An appraisal report is an estimation allowing the appraiser to come to an opinion of value. The appraiser will use a several "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the age and physical deterioration, adding the land value. Another of the approaches is the Sales Comparison Approach - which involves making a comparable analysis to other similar properties within a close vicinity which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is of most importance 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 (List of questions)

An appraiser produces a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers show their expert conclusions in appraisal reports.

What are the reasons I would require your services? (List of questions)

There are many reasons to obtain an appraisal from Wells Appraisal Service with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:

To obtain a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To fight improperly assessed property taxes.
If you need to take care of an estate.
To give you an edge when purchasing a home.
To determine a reasonable property value when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
If you are ever involved in a lawsuit.

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

How is an appraisal different than a home inspection? (List of questions)

The appraiser is not a home inspector and he or she does not do a full home inspection. A third-party home inspector will evaluate the structure of the house, from the roof to the bottom. Commonly, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity 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? (List of questions)

Frankly, they have nothing in common. The CMA relies on indefinite local market trends. The appraisal relies on specific valid comparable sales. The appraisal report will also include neighborhood and building values. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

Who's behind the report is actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Missouri licensed professional who made their livelihood on valuing homes in and around Pulaski County creates the appraisal. Moreover, the appraiser is an independent party, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.

What are the contents of an appraisal report? (List of questions)

The main purpose 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, one will customarily see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value contained and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.(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 attributes, the real property interest in question, and non-real estate items included in the valuation, 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 other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
What was involved in the process of completing the job.

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

Once the report is done, how can I have confidence that the value conclusion is valid? (List of questions)

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

The appraisal contained analysis of the data.

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

That appraisal services were not carried out in a careless or negligent manner.

The final appraisal report was transparent, sound and conclusive.

To become a state licensed appraiser, we must satisfy extensive education and experience requirements that train us to formulate an unbiased opinion. In addition, appraisers must obey a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and real world experience. Once licensed, he or she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (List of questions)

Commonly, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Wells Appraisal Service get the data used to estimate values in Pulaski County or other areas? (List of questions)

One of the most important things an appraiser does is to collect data. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is gathered from a numerous sources. To find out about recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.

What can a full appraisal do for me? (List of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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. 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? (List of questions)

PMI is short for for Private Mortgage Insurance. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the property 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.


	Has your home value appreciated since you first purchased? Call Wells Appraisal Service today at 573-736-5656 to see if you can get rid of your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection (List of questions)

We begin 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 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 landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to 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 available).
List of personal property to be sold with the home.
Any paperwork, 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 central air conditioning or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements when the property is being appraised "as complete".

Define "Market Value" (List of questions)

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 has rights to the appraisal report? (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 certainly entitled to a copy of the report - 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.

The exception to this rule is when a home owner engages 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.

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

Like all things real estate, this is dependent on a home's location. 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 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 weren't far behind, returning 85%. Adding bedrooms and baths can also help 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.