J. Edward Associates has answers to "Frequently Asked Questions"


	J. Edward Associates is happy to handle any questions you might have about appraisals in Rolling Meadows and Cook County. Contact J. Edward Associates today to talk about how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
What would cause me to require your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal has been completed, what guarantee is there that the value conclusion is veritable?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Cook County or other areas?
How can a licensed appraiser help 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?
What does "Market Value" mean?
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

Describe an appraisal (List of questions)

The process of producing an appraisal deals with an estimation which leads to an opinion of value. This opinion or estimate is concluded by using a formal process that generally uses three "common approaches to value". One of the three is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which deals with figuring a comparison to comparable homes close by. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house. One of the least common approaches in appraising homes is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the building.

Describe what an appraiser does (List of questions)

An appraiser offers a fair and credible determination of market value, in the support of real property exchanges. Appraisers demonstrate their expert conclusions in appraisal reports.

What would cause me to require your services? (List of questions)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:

To obtain a loan.
If you would like to lower your property tax obligations.
To show a homeowner has 30% equity and remove PMI.
To challenge inflated property taxes.
If you need to take care of an estate.
To offer you a leg-up when purchasing real estate.
To figure out a likely 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 be involved in a lawsuit - an appraisal will definitely help.

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

What is the difference between an appraisal and a home inspection? (List of questions)

Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. A third-party home inspector will inspect the structure of the house, from the roof to the bottom. Usually, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, 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 other visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (List of questions)

To be blunt, 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 public record. Area and construction costs are also important in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is actually the most significant 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. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.

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

The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:

The client and other intended users.
The intended use of the report.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights in question, 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.
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 entailed in the process of completing the job.

For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report

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

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

That the information analysis implemented in the appraisal was proper.

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

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

That a solid, supportable appraisal report was conferred.

To become a state licensed appraiser, there are intense education requirements as well as on the jobexperience that must be logged - all with the objective of gaining the skills required to provide unbiased value opinions. Plus, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once licensed, he or she must then 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? (List of questions)

Typically, appraisers are hired by lenders to render a value opinion on property involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

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

Compiling data is one of the primary tasks an appraiser engages in. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we use items in the assessor's office and other public documents. 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 product.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.

How can a licensed appraiser help me? (List of questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. When 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 commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from J. Edward Associates is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

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

PMI is short for for Private Mortgage Insurance. PMI covers the lender if a borrower defaults on the loan and the value of the property is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Does your monthly mortgage payment include a fee for PMI?Call J. Edward Associates today at 847-910-7845 or send us an e-mail. A current appraisal could save you thousands.

How do I get ready for the appraiser? (List of questions)

We start with an inspection of the property. 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 amenities. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, 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:

Written property agreements, such as a maintenance agreement for a shared driveway.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (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."

Who has rights to the appraisal report? (List of questions)

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 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 cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others? (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!

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 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 an oddball for your neighborhood in terms of size.