Furr Appraisal Service has answers to "Frequently Asked Questions"

Furr Appraisal Service is willing to elaborate on any questions you might have about appraisals in Benton County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would a person require your services?
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?
Once the report has been completed, what guarantee is there that the value conclusion is accurate?
How are appraisers certified?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Benton 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 actually owns the appraisal report?
Are some home improvements more worthwhile than others?



Define the term "Appraisal"   (Top)

An appraisal is a thought process that concludes with an opinion of value. The appraiser will use a few "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the processes that appraisers use to find value; it involves finding what the improvements would cost less physical degradation, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves making a comparison to comparable homes 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 generally used to find the value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do?   (Top)

An appraiser offers a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers illustate their analysis in appraisal reports.


Why would a person require your services?   (Top)

There are many reasons to purchase an appraisal from Furr Appraisal Service with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
  • To obtain a loan.
  • To reduce your property taxes.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To fight inflated property taxes.
  • If you need to settle an estate.
  • To provide you an edge when purchasing real estate.
  • To figure out a reasonable property value when selling real estate.
  • 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 home.
  • If you ever find yourself in a lawsuit.
For a more extensive description of the appraisal process click here.


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

Home inspectors do not come to an opinion of value and are not appraisers. The point of a home inspection is to evaluate the structure of the property from bottom to rooftop. The stereotypical property inspector's report will contain an evaluation of the integrity of the property's heating systems, 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)

To be blunt, it's like comparing Shakespeare to reality TV. The CMA uses market trends to conduct most of their business. An appraisal relies on comparable sales that can be verified by public record. In addition, the appraisal looks at other factors like condition, neighborhood and construction costs. 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 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, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.

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

Every appraisal should reflect a supported value opinion and should identify the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value reported and a definition of that value.
  • The effective date of the value opinion.(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 characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed 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 entailed in the activity of completing the job.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the report has been completed, what guarantee is there that the value conclusion is accurate?   (Top)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained a suitable analysis of the information.

  • Whether individually or collectively, there were no crucial errors contained in the appraisal, nor any material details left out.

  • That appraisal services were not rendered in a careless or negligent fashion.

  • That a solid, substantiated appraisal report was imparted.
There are intense education and real world experience requirements that must be adhered to in order to achieve the title of "licensed appraiser" in Tennessee. In addition, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Regulations regarding licensing and certification of Real Estate Appraisers vary 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 licensed, he/she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (Top)

Commonly, appraisers are employed by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does an appraiser get the information used to estimate values in Benton County or other areas?   (Top)

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

General data is received from a number of places. To look up recent sales to be used as "comps", we often use 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, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.


What can a full appraisal do for me?   (Top)

An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; 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. Knowing its true value means you can make informed financial decisions.


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

PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan guards the lender if a borrower doesn't pay on the loan and the value of the home is less 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.

Is PMI a part of your monthly house payment?Call Furr Appraisal Service today at (731) 584-9800 or send us an e-mail. Documentation of your home's present value could save you thousands.

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

We start 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 features. 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 shrubs and relocate any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

Define "Market Value"   (Top)

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 actually owns the appraisal report?   (Top)

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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.


Are some home improvements more worthwhile than others?   (Top)

This really depends on where the home is. 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.

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, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.


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