Jarrett Appraisal Services has answers to "Frequently Asked Questions"


	Jarrett Appraisal Services is prepared to reply to any inquiries you might have about appraisals in Salem and Salem County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would a person require a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the appraisal, how can I have confidence that the final number is valid?
How hard is it to become certified?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Salem 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?
How do I get ready for the appraiser?
Define "Market Value"
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (Top)

An appraisal is an estimation allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the house, minus depreciation and physical deterioration, plus the land value. Easily the most common approach in figuring the value of a house is the Sales Comparison Approach which involves making a comparison to similar properties nearby. The Sales Comparison Approach is commonly the most accurate and best indicator of value for a house. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to determine the market value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do? (Top)

An appraiser offers a fair and credible opinion of market value, in the support of real property transactions. Appraisers document their professional investigation in appraisal reports.

Why would a person require a real estate appraisal? (Top)

There are a lot of reasons to obtain an appraisal from Jarrett Appraisal Services with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:

To receive a loan.
If you would like to lower your property tax obligations.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To fight high property taxes.
To settle an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out the most probable 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 an official agency such as the IRS requires it.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

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

Home inspectors do not figure out an opinion of value and are not appraisers. The point of a home inspection is to evaluate the structure of the property from basement to attic. Generally, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Top)

Frankly, it's like comparing Shakespeare to reality TV. The CMA uses market trends to create most of their business. The appraisal is based on specific valid comparable sales. In addition, the appraisal verifies other factors like condition, location and replacement prices. 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.

But the largest differentiator is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. A certified, state licensed professional who has formed a career on valuing real estate in and around Salem County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for assignments, regardless of their value conclusion.

What does the appraisal report contain? (Top)

The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:

The client and other intended users.
The intended use of the report.
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.
Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest valued, 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.
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.
The scope of work used to complete the job.

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

After completing the appraisal, how can I have confidence that the final number is valid? (Top)

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

The appraisal contained a suitable analysis of the information.

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

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

That a credible, supportable appraisal report was conferred.

To become a state licensed appraiser, there are strenuous education requirements as well as on the jobexperience that must be attained - all with the end goal of gaining the skills required to render unbiased value opinions. In addition, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting 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. However, licensing and certification is commonly associated with many hours of classroom study, tests and experience working under a supervisor. Once licensed, he or she is required to complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who hires an appraiser? (Top)

Typically, appraisers are hired by mortgage lenders to render a value opinion on a home involved in a loan transaction. 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 Salem County or other areas? (Top)

One of the most important activities of an appraiser is to gather property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is collected from a number of sources. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely 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 service.

And most importantly, the appraiser assimilates 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 your home's value 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. For parties settling an estate or divorce, an appraisal from Jarrett Appraisal Services is the best way to ensure assets are split up fairly. Simply put, 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? (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the value of the house 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.


	The savings from cancelling the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Jarrett Appraisal Services when it comes to analyzing real estate appreciation in Salem and Salem County. Contact us today.

How do I get ready for the appraiser? (Top)

We start with an inspection of the property. 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. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Information on the latest purchase of the property in the last three years.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (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 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. 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.

This rule doesn't apply when a home owner engages an appraiser directly. 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 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)

Like all things real estate, this is dependent on a home's location. 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 best ROI 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, yielding 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.