B.A. Dwenger Appraisals, LLC has answers to "Frequently Asked Questions"

B.A. Dwenger Appraisals, LLC is always more than happy to handle any concerns you might have about appraisals or real estate in Wayne  and surrounding Counties. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would someone 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's in an appraisal report?
Once the appraisal has been completed, what assurance is there that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does B.A. Dwenger Appraisals, LLC get the information used to estimate values in Wayne County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



What is an appraisal?   (List of questions)

The process of creating an appraisal deals with an evaluation which forms an opinion of value. This opinion or estimate is found by using a formal process that commonly uses three "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, less the depreciation and physical dilapidation, plus the land value. Easily the most common approach in figuring the value of a house is the Sales Comparison Approach which involves concluding a comparison to comparable properties nearby. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the income produced by the building.

Describe what an appraiser does   (List of questions)

An appraiser forumlates a professional, unbiased opinion of market value, in the support of real property exchanges. Appraisers document their expert investigation in appraisal reports.


Why would someone need a real estate appraisal?   (List of questions)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To fight high property taxes.
  • If you need to take care of an estate.
  • To offer you a negotiating tool when purchasing real estate.
  • To find a reasonable sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
If you need more information regarding the appraisal process, please click here.


How is an appraiser different than a home inspector?   (List of questions)

The appraiser is not a home inspector and does not do a complete home inspection. A third-party home inspector will judge the structure of the property, from the top to the bottom. The general home inspector's report will contain an evaluation of the condition of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible 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)?   (List of questions)

To be blunt, it's like comparing sugar and saccharin. The CMA utilizes market trends to conduct most of their business. An appraisal is based on comparable sales that can be proven by records. Also, the appraisal verifies other factors like condition, neighborhood and replacement costs. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person doing the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Indiana licensed professional who has formed a career on valuing homes in and around Wayne County is behind the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.

What's in an appraisal report?   (List of questions)

The main point 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 other intended users.
  • The intended use of the report.
  • The purpose of the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property attributes, including: location, physical description, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 involved in the activity of completing the assignment.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, what assurance is there that the value conclusion is legitimate?   (List of questions)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • The appraisal used an apropos analysis of the data.

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

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

  • That a believable, substantiated appraisal report was communicated.
To become a state licensed appraiser, there are education requirements as well as real world experience that must be attained - all with the objective of gaining the skills required to render unbiased value opinions. Likewise, appraisers must stick to a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions)

Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once an appraiser is licensed, he/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 employs appraisers?   (List of questions)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure property 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 B.A. Dwenger Appraisals, LLC get the information used to estimate values in Wayne County or other areas?   (List of questions)

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

General data is gathered from a number of places. To look up recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

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

What can a full appraisal do for me?   (List of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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 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?   (List of questions)

PMI stands for Private Mortgage Insurance. It protects the lender in case a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

The savings from getting rid of your PMI pays for the appraisal in a matter of months. Nobody is more qualified than B.A. Dwenger Appraisals, LLC when it comes to analyzing real estate appreciation in Richmond and Wayne County. Contact us today.

Do you need anything from the homeowner in advance?   (List of questions)

We begin 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 get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • A plot plan or survey of the house and land (if available).
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Information on "Homeowners Associations" or condominium covenants and fees.

How does an appraiser define "Market Value"?   (List of questions)

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."

Does the appraisal belong to the bank or the consumer?   (List of questions)

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 entitled to a copy of the report - 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 how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (List of questions)

Like all things real estate, this is dependent on a home's location. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 were second, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.