1st Choice Valuation Services (207) 240-0991 has answers to "Frequently Asked Questions"

1st Choice Valuation Services (207) 240-0991 is ready to handle any concerns you might have about appraisals or real estate in Auburn and Franklin County. Feel free to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would someone request a real estate appraisal?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the assignment has been completed, what guarantee is there that the value indicated is legitimate?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Franklin County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Top)

The procedure of producing an appraisal consists of an evaluation which forms an opinion of value. The appraiser will use a few "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the property, minus age and physical deterioration, 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 concluding a comparison to comparable homes close by. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is generally used for finding 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.

Describe what an appraiser does   (Top)

An appraiser provides a fair and credible assessment of market value, in the support of real property transactions. Appraisers exhibit their expert conclusions in appraisal reports.


Why would someone request a real estate appraisal?   (Top)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
  • If you are applying for a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To contest inflated property taxes.
  • To handle an estate.
  • To give you a leg-up when purchasing real estate.
  • To find the most probable sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • 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 help.
For a more detailed explanation of the appraisal process click here.


Is an appraisal the same as a home inspection?   (Top)

Home inspectors do not provide an opinion of value and are not appraisers. A third-party home inspector will judge the structure of the property, from the top to the bottom. For the most part, a home inspection report will evaluate the amenities and the necessities 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

Simply, they have nothing in common. The CMA uses market trends to create most of their business. Appraisals use comparable sales which are valid resources. Also, the appraisal verifies other factors like condition, neighborhood and building costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is the person creating the report. A CMA is written 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, state licensed professional who bases their livelihood on valuing real estate in and around Franklin County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the price of the home.

What's in an appraisal report?   (Top)

Every report must indicate a believable value opinion and should clearly state the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The reason for the appraisal.
  • The type of value reported 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!)
  • Pertinent property characteristics, including: location, physical attributes, 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 items.
  • 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 included in the activity of completing the job.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, what guarantee is there that the value indicated is legitimate?   (Top)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal used a suitable analysis of the information.

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

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

  • That a solid, defensible appraisal report was conferred.
There are intense classroom and on the job experience requirements that must be met in order to get an appraisal license in Maine. Plus, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is commonly associated with 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 engages the services of appraisers?   (Top)

Typically, appraisers are employed by lenders to render a value opinion on a home involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Franklin County or other areas?   (Top)

One of the most important tasks an appraiser must accomplish is to compile data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need 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 product.

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

What can a full appraisal do for me?   (Top)

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. If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from 1st Choice Valuation Services (207) 240-0991 is the best documentation to ensure assets are divided fairly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

What exactly is PMI and how can I get rid of it?   (Top)

PMI stands for Private Mortgage Insurance. This added plan covers the lender in the event a borrower defaults on the loan and the value of the property is lower than the loan balance. 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 money you keep from getting rid of your PMI will make up for the cost of the appraisal in no time. Nobody is more qualified than 1st Choice Valuation Services (207) 240-0991 when it comes to analyzing real estate appreciation in Auburn and Franklin County. Contact us today.

Should I do anything in advance of the appraisal appointment   (Top)

The first step in most appraisals is the property 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 condition of its features. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any bushes 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 readily available).
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • A list of any major home improvements and upgrades, 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).
  • Information on "Homeowners Associations" or condominium covenants and fees.

Define "Market Value"   (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?   (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 appraisal - 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define 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?   (Top)

It really depends on the market. 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 most value returned from renovating a home comes in the kitchen. 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 weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.