Michiana Appraisals, LLC. has answers to "Frequently Asked Questions"


	Michiana Appraisals, LLC. is prepared to reply to any concerns you might have about appraisals in Granger and St Joseph County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would someone need a real estate appraisal?
What is the difference between an appraisal and 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?
Upon completion of the appraisal, what assurance is there that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who hires an appraiser?
Where does Michiana Appraisals, LLC. get the information used to estimate values in St Joseph County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
What is "Market Value?"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

What is an appraisal? (Top)

The method of producing an appraisal report consists of an investigation which leads to 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 in use is the Cost Approach, which is what it would cost to replace the improvements to the home, minus depreciation and physical dilapidation, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable houses nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is the best 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 (Top)

An appraiser provides an impartial and well supported opinion of market value, often in the context of a real estate sale. Appraisers show their professional analysis in appraisal reports.

Why would someone need a real estate appraisal? (Top)

There are many reasons to purchase an appraisal from Michiana Appraisals, LLC. with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:

If you are applying for a loan.
If you would like to lower your property tax burden.
To build a case for a homeowner's equity and remove insurance.
To fight high property taxes.
To handle an estate.
To provide you a leg-up when purchasing real estate.
To figure out a reasonable property value when putting your home on the market.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS need an appraisal on every house.
If you are ever involved in a civil case.

If you need a more detailed explanation of the appraisal process, please click here.

What is the difference between an appraisal and a home inspection? (Top)

Appraisers do not do complete home inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the home from foundation to top. The stereotypical property inspector's report will include an evaluation of the condition of the property's heating system, 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? (Top)

Frankly, they have nothing in common. What the CMA depends on are superficial trends. An appraisal utilizes comparable sales that can be validated by public record. In addition, the appraisal looks at other factors like condition, area and building prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is who's behind the report. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who has formed a career on valuing real estate in and around St Joseph County is behind the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

What are the contents of an appraisal report? (Top)

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, you'll usually see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
Any 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.
What was included in the activity of completing the appraisal.

For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, what assurance is there that the final number is trustworthy? (Top)

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

That the information analysis contained in the appraisal was proper.

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

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

That a trustworthy, supportable appraisal report was communicated.

To become a state licensed appraiser, we must fulfill intense education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Top) Licensing and certification is achieved through coursework, tests and real world experience. Once licensed, he/she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires an appraiser? (Top)

Mortgage lenders are an appraiser's most likely client, requesting their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Michiana Appraisals, LLC. get the information used to estimate values in St Joseph County or other areas? (Top)

Compiling data is one of the primary tasks an appraiser performs. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents. Appraisers often have to report when a property is 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 past experience in doing assignments for other properties in the same market.

Why should I hire a licensed appraiser? (Top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want a full appraisal. If you're selling your home, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it? (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender in case a borrower is unable to pay on the loan and the market price of the house is less than the balance of 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.


	The savings from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than Michiana Appraisals, LLC. when it comes to analyzing real estate appreciation in Granger and St Joseph County. Contact us today.

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

We start with an inspection of the home. 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 features. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

A plot plan or survey of the house and land (if available).
List of personal property to be sold with the building.
Most recent real estate tax bill from St Joseph and or legal description of the property.
A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?" (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 has rights to the appraisal report? (Top)

For mortgage transactions, the lender requests 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 certainly 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 situations, the appraiser may state how the appraisal can be used; 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? (Top)

The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe move. 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.