Harmon Appraisal & Consulting has answers to "Frequently Asked Questions"


	Harmon Appraisal & Consulting is always ready to answer any inquiries you might have about appraisals in Logan County. Contact Harmon Appraisal & Consulting today to see how we can help you with your valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person need a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
After completing the report, what assurance is there that the value indicated is veritable?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Logan County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Describe an appraisal (Return to top)

The procedure of producing an appraisal report consists of an evaluation which leads to an opinion of value. The real estate appraiser will use a several "approaches," typically three, to arrive at the estimation of market value. One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding similar properties in close proximity and discerning value based on comparing those homes to the property being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

What does an appraiser do? (Return to top)

An appraiser offers a professional, unbiased assessment of market value, in the support of real property exchanges. Appraisers present their professional conclusions in appraisal reports.

Why would a person need a real estate appraisal? (Return to top)

There are a lot of reasons to obtain an appraisal from Harmon Appraisal & Consulting with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:

To get a loan.
To reduce your tax burden.
To build a case for a homeowner's equity and remove PMI.
To challenge high property taxes.
To settle an estate.
To give you a negotiating tool when purchasing real estate.
To find a likely price when selling your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS require an appraisal on every home.
If you ever find yourself in a lawsuit.

For a more extensive description of the appraisal process click here.

How is an appraiser different than a home inspector? (Return to top)

The appraiser is not a home inspector and does not do a full home inspection. The purpose of a home inspection is to investigate the structure of the property from basement to attic. The general house inspector's report will include an evaluation of the integrity of the house'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.

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

Frankly, it's night and day. What the CMA depends on are vague trends. An appraisal relies on comparable sales that can be proven by records. The appraisal report will also include area and construction prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Arkansas licensed professional who has formed their livelihood on valuing homes in and around Logan County creates the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the price of the home.

What can I expect to see in my appraisal report? (Return to top)

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

Who engaged the appraiser and other intended users.
The intended use of the report.
The reason for the assignment.
The type of value contained and a definition of that value.
The effective date of the value opinion.
Relevant property attributes, including: location, physical characteristics, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, 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 to complete the job.

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

After completing the report, what assurance is there that the value indicated is veritable? (Return to top)

In the documentation of an appraisal, each appraiser must ensure the following:

The appraisal contained an apropos analysis of the data.

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

That appraisal services were provided in a careful and cognizant manner.

The final appraisal report was transparent, credible and defensible.

There are rigorous education and real world experience requirements that must be adhered to in order to get an appraisal license in Arkansas. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification is achieved through classroom study, tests and experience working under a supervisory appraiser. Once licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Return to top)

Mortgage lenders are an appraiser's most likely client, using their services to ensure a home 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 an appraiser get the information used to estimate values in Logan County or other areas? (Return to top)

One of the primary things an appraiser does is to gather property data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is received from a number of places. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents verify 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 assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

How can a licensed appraiser help me? (Return to top)

An appraisal is a valuable tool whenever your home's value is relevant to a financial decision. If you're selling your house, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Harmon Appraisal & Consulting is the best way to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (Return to top)

PMI is an acronym for Private Mortgage Insurance. This supplemental plan protects the lender in case a borrower doesn't pay on the loan and the value of the property 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.


	Does your monthly loan payment have a lineitem for PMI?Call Harmon Appraisal & Consulting today at 479-963-1600 or send us an e-mail. Documentation of your home's present value could save you thousands.

How do I get ready for the appraiser? (Return to top)

The first step in most appraisals is the home inspection. During this process, we 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:

Any records on the purchase of the property for the last three years.
Information on any written private agreements, such as a shared driveway with a neighbor.
Most recent real estate tax bill from Logan and or legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser define "Market Value"? (Return to 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 has rights to the appraisal report? (Return to 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 report - it's usually bundled with all the other closing documents - but is not entitled 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 scenarios, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

How can I get the most ROI out of home improvements? (Return to top)

The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 are right up there with kitchens, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.