B.W. Home Appraisal has answers to "Frequently Asked Questions"

B.W. Home Appraisal is happy to elaborate on any inquiries you might have about appraisals or real estate in Houston and Harris County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
Why would a person request services from B.W. Home 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?
After completing the appraisal, how can I have assurance that the value indicated is trustworthy?
What are the requirements to be a certified appraiser?
Who are an appraiser's customers?
Where does B.W. Home Appraisal get the information used to estimate values in Harris County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
How can I get the most ROI out of home improvements?



What is an appraisal?   (Return to top)

An appraisal is an inspection that concludes with an opinion of value. This opinion or estimate is discerned by a formal method that typically utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the depreciation and physical dilapidation, adding the land value. The Sales Comparison Approach deals with searching for comparable properties in the vicinity and discovering the value based on making a comparison of those properties to the home being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a home. The Income Approach is primarily 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.

What does an appraiser do?   (Return to top)

An appraiser offers an impartial and well substantiated determination of market value, often in the context of a real estate exchange. Appraisers illustate their expert conclusions in appraisal reports.


Why would a person request services from B.W. Home Appraisal?   (Return to top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
  • To get a loan.
  • If you would like to lower your property tax obligations.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To give you an edge when purchasing a home.
  • To figure out a reasonable sales price 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.
  • Because a government agency such as the IRS requires it.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process involved in getting an appraisal.


Is an appraisal the same as a home inspection?   (Return to top)

Appraisers do not do perform residential property inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the home from basement to top. The archetypal house inspector's report will include an evaluation of the condition of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)?   (Return to top)

Simply put, it's apples and oranges. The CMA utilizes market trends to create most of their business. An appraisal is based on comparable sales that can be proven by public record. Area and architectural values are also important in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is the person behind 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 properties in and around Harris County creates the appraisal. Further, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the agent, whose income is tied to the value of the home.

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

The main point of an appraisal report is to let the reader know the value of the real estate in question, 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 appraisal.
  • The reason for the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • Any 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 process of completing the appraisal.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, how can I have assurance that the value indicated is trustworthy?   (Return to top)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained analysis of the information.

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

  • That appraisal services were rendered in a careful and judicious manner.

  • That a believable, supportable appraisal report was communicated.
To become a state licensed appraiser, there are strenuous education requirements as well as experience that must be logged - all with the end goal of being able to provide unbiased value opinions. In addition, appraisers must follow a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Return to top) Licensing and certification requires coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Return to top)

Commonly, appraisers are employed by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does B.W. Home Appraisal get the information used to estimate values in Harris County or other areas?   (Return to top)

One of the primary things an appraiser does is to assimilate data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments 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 the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from B.W. Home Appraisal is the best documentation to ensure assets are split up properly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it?   (Return to top)

PMI is an acronym for Private Mortgage Insurance. It covers the lender if a borrower defaults on the loan and the market price of the property is lower than the loan balance. 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 pays for the appraisal in a matter of months. Nobody is more qualified than B.W. Home Appraisal when it comes to analyzing real estate appreciation in Houston and Harris County. Contact us today.

How do I get ready for the appraiser?   (Return to top)

We begin 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 condition of its amenities. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Any information on the purchase of the property for the last three years.
  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A list of "proposed" improvements when the property is being appraised "as complete".

How does an appraiser 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."

Once complete, who actually owns the appraisal report?   (Return to top)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (Return to top)

This really depends on where the home is. 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, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.