Southern Appraisal, a division of Southern Abode, LLC has answers to "Frequently Asked Questions"


	Southern Appraisal, a division of Southern Abode, LLC is eager to talk to you about any concerns you might have about appraisals in Shelby County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would someone need 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's in an appraisal report?
After completing the report, what assurance is there that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Shelby County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Who actually owns the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (See list of FAQ's)

An appraisal report is an estimation leading to an opinion of value. The appraiser will typically use a number of "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves finding what the improvements would cost without physical depreciation, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with making a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of value for a residence. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

Describe what an appraiser does (See list of FAQ's)

An appraiser generates an unprejudiced and well substantiated assessment of market value, often in the context of a real estate sale. Appraisers document their expert analysis in appraisal reports.

Why would someone need your services? (See list of FAQ's)

There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal 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 challenge inflated property taxes.
To settle an estate.
To offer you a negotiating tool when purchasing a home.
To determine an honest property value when listing your home.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
It's possible you could be involved in a lawsuit - an appraisal will definitely help.

Click here for a more detailed explanation of the process of getting an appraisal.

Is an appraisal the same as a home inspection? (See list of FAQ's)

Home inspectors do not estimate an opinion of value and are not appraisers. The point of a home inspection is to evaluate the structure of the house from foundation to top. Usually, a home inspection report will evaluate the amenities and the necessities of the house: 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 other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (See list of FAQ's)

Frankly, it's night and day. What the CMA relies upon are superficial trends. An appraisal utilizes comparable sales that can be verified by public record. Area and building values are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Tennessee licensed professional who has formed a career on valuing properties in and around Shelby County is behind the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What's in an appraisal report? (See list of FAQ's)

The main objective of an appraisal document 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 appraisal.
The purpose of the assignment.
The type of value contained and a definition of the value reported.
The effective date of the value opinion.
Pertinent property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 while working up the job.

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

After completing the report, what assurance is there that the value conclusion is legitimate? (See list of FAQ's)

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

The appraisal contained an appropriate analysis of the information.

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

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

That a credible, substantiated appraisal report was communicated.

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

(See list of FAQ's) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he/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 hires an appraiser? (See list of FAQ's)

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

Where does an appraiser get the information used to estimate values in Shelby County or other areas? (See list of FAQ's)

Collecting information is one of the main things an appraiser does. Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is collected from a numerous places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. 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, and 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 houses in the same market.

What can a full appraisal do for me? (See list of FAQ's)

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 house, an appraisal assists you in setting 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 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? (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan guards the lender in case a borrower doesn't pay on the loan and the value of the property is lower than what is owed on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.


	Did you have less than 20% to put down on your mortgage? Contact Southern Appraisal, a division of Southern Abode, LLC today at 901.853.5353 to see if you can cancel your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal inspection (See list of FAQ's)

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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, try if possible to have the following items:

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.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

Define "Market Value" (See list of FAQ's)

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? (See list of FAQ's)

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 appraisal - it's usually bundled with all the other closing documents - but is not allowed 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 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 do whatever they want with the appraisal.

Which home renovations add the most to the price? (See list of FAQ's)

It really depends on the market. 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. 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 are right up there with kitchens, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.