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Lareau Appraisal Service has answers to "Frequently Asked Questions"

Lareau Appraisal Service is always ready to handle any concerns you might have about appraisals or real estate in Saint Albans and Franklin County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would I need services from Lareau Appraisal Service?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Upon completion of the report, what guarantee is there that the final number is trustworthy?
How difficult is it to become certified?
Who do appraisers work for?
Where does Lareau Appraisal Service get the data used to estimate values in Franklin County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Do you need anything from me in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal?   (Top)

An appraisal is an inspection that concludes with an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find value; it involves discerning what the improvements would cost less physical degradation, adding the land value. The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which concerns making a comparison to comparable houses close by. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to determine the value of a property based on what an investor would pay based on the income produced by the property.

What does an appraiser do?   (Top)

An appraiser offers an impartial and well justified opinion of market value, often in the context of a real estate purchase. Appraisers exhibit their expert conclusions in appraisal reports.

Why would I need services from Lareau Appraisal Service?   (Top)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
  • To obtain a loan.
  • To reduce your property taxes.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To fight improperly assessed property taxes.
  • To deal with an estate.
  • To give you a negotiating tool when purchasing real estate.
  • To figure out an honest property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you are ever involved in a civil case.
Click here for a more extensive explanation of the process involved in getting an appraisal.

Is an appraisal the same as a home inspection?   (Top)

Home inspectors do not estimate an opinion of value and do not do appraisal reports. The point of a home inspection is to investigate the structure of the home from basement to rooftop. For the most part, a home inspection report will evaluate the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, 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 visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

To be honest, they share nothing in common. What the CMA depends on are superficial trends. An appraisal utilizes comparable sales that can be validated by records. Also, the appraisal checks other factors like condition, location and construction prices. The CMA will provide a non-specific 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. 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, state licensed professional who made their livelihood on valuing real estate in and around Franklin County creates the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the agent, whose income is tied to the price of the home.

What does the appraisal report contain?   (Top)

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:
  • 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.
  • Relevant property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible considerations.
  • Any 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.
  • The scope of work used while working up the appraisal.
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what guarantee is there that the final number is trustworthy?   (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 contained in the appraisal was suitable.

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

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

  • The final appraisal report was clear, legitimate and not easily discredited.
To become a state licensed appraiser, we must fulfill considerable education and experience requirements that train us to formulate an unbiased opinion. Plus, appraisers must obey a strict industry code of ethics and respect 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 classroom study, tests and real world experience. Once licensed, he or 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 do appraisers work for?   (Top)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Lareau Appraisal Service get the data used to estimate values in Franklin County or other areas?   (Top)

Gathering data is one of the primary tasks an appraiser engages in. Data can be split into Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other public documents reveal 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 assembles general data from his or her past experience in creating appraisals for other properties in the same market.

How can a licensed appraiser help me?   (Top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want a full appraisal. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Lareau Appraisal Service is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (Top)

PMI is short for for Private Mortgage Insurance. It guards the lender if a borrower defaults on the loan and the value of the property is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Is PMI something increasing your monthly mortgage payment?Call Lareau Appraisal Service today at 802-527-0644 or send us an e-mail. A current appraisal could save you thousands.

Do you need anything from me in advance?   (Top)

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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would get in our way while we measure the structure. On the inside, make sure we can get to 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:
  • A survey or plot map of the property and building (if available).
  • List of personal property to be sold with the building.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser define "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."

Does the appraisal belong to the bank or the consumer?   (Top)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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 entitled to a copy of the report - 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 engages an appraiser directly. In these situations, the appraiser may state 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.

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

The answer to this is different depending upon the location of the home. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.