ESTHER-FLAK APPRAISAL CO has answers to "Frequently Asked Questions"

ESTHER-FLAK APPRAISAL CO is always ready to elaborate on any concerns you might have about appraisals in Grand Rapids and Kent County. Contact us today to learn how we can help solve your specific valuation problems.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would require 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 assignment has been delivered, what assurance is there that the final number is veritable?
How are appraisers certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Kent 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"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Go to list of  questions)

The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured by a formal process that typically utilizes three "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus age and physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar houses nearby and discovering the value based on comparing those properties to the property being appraised. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a home. The Income Approach is generally used for determining 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.

Describe what an appraiser does   (Go to list of  questions)

An appraiser generates a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers demonstrate their expert analysis in appraisal reports.


What are the reasons someone would require a real estate appraisal?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • To receive a loan.
  • If you would like to lower your property tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To contest improperly assessed property taxes.
  • To deal with an estate.
  • To offer you a negotiating tool when purchasing a home.
  • To figure out an honest sales price when selling your home.
  • 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 definitely help.
For a more extensive explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

The appraiser is not a home inspector and does not do a full home inspection. A third-party home inspector will inspect the structure of the home, from the top to the bottom. Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Frankly, it's like comparing opera to country. The CMA utilizes market trends to generate most of their business. An appraisal relies on comparable sales that can be proven by records. Also, the appraisal looks at other factors like condition, area and replacement costs. 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.

The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Michigan licensed professional who bases their livelihood on valuing real estate in and around Kent County creates the appraisal. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What's in an appraisal report?   (Go to list of  questions)

Every appraisal must indicate a credible estimate of value and should document the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the appraisal.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.(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 property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been delivered, what assurance is there that the final number is veritable?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • That the information analysis utilized in the appraisal was appropriate.

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

  • That appraisal services were done in a careful and conscientious fashion.

  • That a solid, supportable appraisal report was imparted.
To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be logged - all with the objective of gaining the skills required to provide unbiased value opinions. Plus, 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 documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to list of  questions) Regulations regarding licensing and certification 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 is required to take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who do appraisers work for?   (Go to list of  questions)

Most of the time, appraisers are employed by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Kent County or other areas?   (Go to list of  questions)

One of the most important tasks an appraiser engages in is to collect data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is collected from a numerous places. To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser assimilates 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?   (Go to list of  questions)

If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

The amount you keep from cancelling your PMI will make up for the cost of the appraisal in no time. ESTHER-FLAK APPRAISAL CO has years of experience with value trends in Grand Rapids and Kent County. Contact us today.

How do I get ready for the appraiser?   (Go to list of  questions)

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. 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 bushes so we can be free to get an accurate measurement of exterior walls.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

Define "Market Value"   (Go to 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?   (Go to list of  questions)

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 entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, 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 do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (Go to list of  questions)

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 live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

As a rule, the best ROI 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 were second, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.