Ralph Real Estate Appraisal, Inc. has answers to "Frequently Asked Questions"

Ralph Real Estate Appraisal, Inc. is more than happy to address any inquiries you might have about appraisals in Shelby County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would someone need a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Upon completion of the report, what assurance is there that the value conclusion is valid?
What are the requirements to be a certified appraiser?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Shelby 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?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



What is an appraisal?   (List of questions)

The appraisal process is an evaluation that generates an opinion of value. The real estate appraiser will use a few "approaches," typically three, to come to the estimation of market value. One of the methods 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. The Sales Comparison Approach involves finding similar homes in the vicinity and finding value based on comparing those houses to the house being investigated. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. 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 produce.

Describe what an appraiser does   (List of questions)

An appraiser generates an impartial and well justified opinion of market value, often in the context of a real estate exchange. Appraisers illustate their expert investigation in appraisal reports.


Why would someone need a real estate appraisal?   (List of questions)

There are a lot of reasons to order an appraisal from Ralph Real Estate Appraisal, Inc. with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
  • To receive a loan.
  • To lower your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To contest inflated property taxes.
  • To settle an estate.
  • To offer you a leg-up when purchasing real estate.
  • To figure out an honest sales price when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • If you are ever involved in a lawsuit.
For a more extensive explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (List of questions)

The appraiser is not a home inspector and does not do a full home inspection. The purpose of a home inspection is to investigate the structure of the home from bottom to attic. Usually, a home inspection report will discuss 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 capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (List of questions)

Frankly, it's apples and oranges. The CMA depends on indefinite local market trends. Appraisals use similar sales which are verifiable resources. In addition, the appraisal looks at 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 biggest difference is the person behind the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their outcome.

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

Each appraisal should reflect a credible estimate of value and must identify the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • 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 appraiser's opinions and conclusions.
  • Relevant property attributes, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
  • All 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.
  • The scope of work used when completing the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what assurance is there that the value conclusion is valid?   (List of questions)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • That the information analysis utilized in the appraisal was proper.

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

  • That appraisal services were not carried out in a careless or negligent fashion.

  • The final appraisal report was understandable, legitimate and defensible.
To become a state licensed appraiser, we must meet extensive education and experience requirements that enable us to formulate an unbiased opinion. In addition, appraisers must stick to a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating 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. In general, licensing and certification typically translates to many hours of coursework, tests and real world experience. Once licensed, he/she must then complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who hires an appraiser?   (List of questions)

Typically, appraisers are called upon by mortgage lenders to render a value opinion on property involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

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

One of the main activities of an appraiser is to assimilate data. Data can be divided into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is collected from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals 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 house, an appraisal will help you determine the most appropriate price. When buying, you can avoid 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. Knowing its true value means you can make the right financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. It guards the lender in the event a borrower doesn't pay on the loan and the value of the house is less than what is owed 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.

Is PMI a part of your monthly house payment?Call Ralph Real Estate Appraisal, Inc. today at 901-755-8993 or send us an e-mail. Documentation of your home's current value could save you thousands.

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

The first step in most appraisals is the home inspection. During this process, the appraiser 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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any shrubs and relocate any items that would get in our way while we measure the structure. On the inside, make sure we can get to items 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:
  • A survey or plot map of the property and building (if available).
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A list of "proposed" improvements if the property is to be appraised "as complete".

What is "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."

Who has rights to the appraisal report?   (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 certainly entitled to a copy of the report - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate 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 do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating?   (List of questions)

The answer to this is different depending upon the location of the home. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 are right up there with kitchens, returning 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 atypical for your neighborhood in terms of size.