R L Murray has answers to "Frequently Asked Questions"


	R L Murray is ready to reply to any questions you might have about appraisals or real estate in Venango County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
After completing the appraisal, what guarantee is there that the value indicated is legitimate?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in Venango County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (List of questions)

An appraisal report is an estimation allowing the appraiser to come to an opinion of value. This opinion or estimate is arrived at through a formal method that generally uses three "common approaches to value". One of them is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with making a comparison to comparable homes nearby. Being the most common approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. 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 would bring in.

What does an appraiser do? (List of questions)

An appraiser forumlates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers show their expert findings in appraisal reports.

What would cause me to need a real estate appraisal? (List of questions)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:

If you are applying for a loan.
To reduce your property taxes.
To build a case for a homeowner's equity and remove insurance.
To contest improperly assessed property taxes.
If you need to take care of an estate.
To offer you a negotiating tool when purchasing a home.
To find the most probable property value when selling your home.
To protect 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 have to deal with being in a lawsuit - an appraisal will help.

For a more detailed explanation of the appraisal process click here.

How is an appraisal different than a home inspection? (List of questions)

Appraisers do not do perform house inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and appliances of a home, from the roof to the foundation. Usually, a home inspection report will explain the amenities and the necessities of the property: 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, exposed 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)? (List of questions)

Simply put, it's like comparing Shakespeare to reality TV. What the CMA relies upon are vague trends. Appraisals use comparable sales which are valid resources. In addition, the appraisal looks at other factors like condition, location and replacement prices. 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.

The credentials of the person behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Pennsylvania licensed professional who bases a career on valuing homes in and around Venango County creates the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

What are the contents of an appraisal report? (List of questions)

Each appraisal should indicate a believable value opinion and must identify the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the report.
The reason for the appraisal.
The type of value contained and a definition of that value.
The effective date of the value opinion.(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 description, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
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.
What was entailed in the activity of completing the job.

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

After completing the appraisal, what guarantee is there that the value indicated is legitimate? (List of questions)

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

The appraisal contained a suitable analysis of the information.

Whether individually or collectively, there were no grave errors contained in the appraisal, nor any relevant details left out.

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

The final appraisal report was transparent, legitimate and conclusive.

To become a state licensed appraiser, we must meet considerable education and experience requirements that prepare us to formulate an unbiased opinion. Likewise, appraisers must obey a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets 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 vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (List of questions)

Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

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

Collecting data is one of the main things an appraiser engages in. Data can be classified 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 gathered from a many places. To find out about recent sales to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Appraisers often need 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 product.

And last but not least, the appraiser assembles 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. 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. 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 is an acronym for Private Mortgage Insurance. This supplementary plan covers the lender in case a borrower defaults on the loan and the market price of the house is lower than the balance of the loan. 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 the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than R L Murray when it comes to analyzing real estate appreciation in Oil City and Venango County. Contact us today.

Does the appraiser need anything from the homeowner in advance? (List of questions)

The first step in most appraisals is the home inspection. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general status of its features. Inside, pick up any clutter and make sure 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:

A plot plan or survey of the house and land (if available).
Title policy that lists encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
A list of "suggested" improvements when the property is being appraised "as complete".

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 orders 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 certainly entitled to a copy of the report - 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 engages 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 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? (List of questions)

The added value of a particular amenity truly depends on the local market. 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 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 weren't far behind, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.