Detroit Metro Appraisals has answers to "Frequently Asked Questions"


	Detroit Metro Appraisals is eager to reply to any inquiries you might have about appraisals in Sterling Heights and Macomb County. Contact Detroit Metro Appraisals today to learn how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to need a real estate appraisal?
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's in an appraisal report?
After completing the report, what guarantee is there that the value indicated is veritable?
How difficult is it to become certified?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Macomb 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?
Does the appraiser need anything from me in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

What is an appraisal? (Return to top)

The appraisal process is an estimation that leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or valuation. The Cost Approach is one of the methods that appraisers use to find the value of a property; it involves finding what the improvements would cost minus physical degradation, adding the land value. The Sales Comparison Approach deals with finding similar homes in the vicinity and figuring out the value based on comparing those houses to the house in question. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a house. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do? (Return to top)

An appraiser generates an unbiased and well justified opinion of market value, often in the context of a real estate sale. Appraisers exhibit their expert analysis in appraisal reports.

What would cause me to need a real estate appraisal? (Return to top)

There are many reasons to obtain an appraisal from Detroit Metro Appraisals with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:

If you are applying for a loan.
If you would like to lower your property tax obligations.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To contest inflated property taxes.
If you need to take care of an estate.
To give you an edge when purchasing real estate.
To figure out the most probable property value when putting your home on the market.
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 need an appraisal on every house.
It's possible you could be involved in a lawsuit - an appraisal will definitely help.

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

What is the difference between an appraisal and a home inspection? (Return to top)

Home inspectors do not figure out an opinion of value and do not do appraisal reports. A third-party home inspector will investigate the structure of the house, from the top to the bottom. Commonly, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, 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 visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Return to top)

Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on indistinct market trends. Appraisals use comparable sales which are verifiable resources. Location and construction values are also precedent in an appraisal. 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.

But the most significant factor is who's behind 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 made their livelihood on valuing real estate in and around Macomb County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for work they perform, regardless of their outcome.

What's in an appraisal report? (Return to top)

Every appraisal should indicate a supported estimate of value and will identify the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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 considered to complete the appraisal.

For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, what guarantee 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 major errors of omission or commission were not committed individually or collectively.

That appraisal services were delivered in a careful and judicious fashion.

The final appraisal report was easy to explain, credible and not easily discredited.

To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be logged. Likewise, appraisers must stick to a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he or she is required to take continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

Who employs appraisers? (Return to top)

Commonly, appraisers are called upon by mortgage lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Macomb County or other areas? (Return to top)

One of the primary activities of an appraiser is to assimilate property data. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To verify actual sales prices, we use tax records and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.

And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

What can a full appraisal do for me? (Return to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. This additional policy protects the lender in case a borrower defaults on the loan and the value of the property is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Did you secure your mortgage with less than 20% down? Call Detroit Metro Appraisals today at 2483425364 to see if you can save money by removing your Private Mortgage Insurance premium.

Does the appraiser need anything from me in advance? (Return to top)

The first step in most appraisals is the property 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. On the home's interior, make sure it is clutter free and that we can access 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.

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

Information on any written private agreements, such as a shared driveway with a neighbor.
List of personal property to be sold with the home.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system 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).
Most recent real estate tax bill and or legal description of the property.

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."

Does the appraisal belong to the bank or the consumer? (Return to 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 appraisal - 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.

This rule doesn't apply when a home owner hires an appraiser directly. In these situations, 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.

Which home renovations add the most to the price? (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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%. 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.