Mid-Ohio Appraisal Services has answers to "Frequently Asked Questions"


	Mid-Ohio Appraisal Services is always willing to talk to you about any concerns you might have about appraisals in Columbus and Franklin County. Contact us today to talk about how we can help solve your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons a person would request a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
After completing the report, what assurance is there that the value conclusion is accurate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Franklin County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Back to top)

The procedure of performing an appraisal report deals with an estimation which forms an opinion of value. The appraiser must use a several "approaches," typically three, to arrive at the estimation of market value. One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for similar properties in close proximity and discovering the value based on comparing those properties to the house being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of value for a residential property. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

Describe what an appraiser does (Back to top)

An appraiser produces an objective and well substantiated assessment of market value, often in the context of a real estate exchange. Appraisers exhibit their expert analysis in appraisal reports.

What are the reasons a person would request a real estate appraisal? (Back to top)

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

To get a loan.
To lower your property taxes.
To show a homeowner has 30% equity and remove insurance.
To fight high property taxes.
To handle an estate.
To give you a negotiating tool when purchasing a home.
To find a likely sales price when selling real estate.
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.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

If you need a more detailed explanation of the appraisal process, please click here.

How is an appraisal different than a home inspection? (Back to top)

The appraiser is not a home inspector and he or she does not do a complete home inspection. An inspection is a third-party evaluation of the accessible structure and appliances of a home, from the top to the bottom. The archetypal house inspector's report will include an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

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

To be honest, they have nothing in common. The CMA utilizes market trends to conduct most of their business. The appraisal depends on similar verifiable comparable sales. Location and architectural values are also important in an appraisal. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is who's 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. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the property's value, unlike the real estate agent, whose income is tied to the price of the home.

What are the contents of an appraisal report? (Back to top)

The main objective of an appraisal document 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:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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 considered while working up the job.

For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

After completing the report, what assurance is there that the value conclusion is accurate? (Back to top)

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

The appraisal used a suitable analysis of the information.

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

That appraisal services were rendered in a careful and judicious fashion.

The final appraisal report was transparent, sound and conclusive.

To become a state licensed appraiser, we must fulfill considerable education and experience requirements that train us to formulate an unbiased opinion. In addition, appraisers must abide by a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he/she is required to take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Back to top)

Commonly, appraisers are called upon by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

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

Compiling data is one of the main tasks an appraiser engages in. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a many sources. To look up recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need to report when a property is 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 houses in the same market.

Why do I need a professional appraisal? (Back 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. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Mid-Ohio Appraisal Services is the best documentation to ensure assets are divided properly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the value of the property is less than the balance of 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.


	The money you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. Mid-Ohio Appraisal Services is in the business of tracking value trends in Columbus and Franklin County. Contact us today.

Do you need anything from me in advance? (Back to top)

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 amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any landscaping and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:

A plot plan or survey of the house and land (if available).
List of personal property to be sold with the building.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

What does "Market Value" mean? (Back 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."

Does the appraisal belong to the bank or the consumer? (Back to top)

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 entitled to a copy of the appraisal - 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.

It's different when it's the homeowner engaging 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 noted otherwise, the home owner can do whatever they want with the appraisal.

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

The added value of a particular amenity truly depends on the local market. 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

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, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.