First State Appraisal Group, Inc. has answers to "Frequently Asked Questions"


	First State Appraisal Group, Inc. is willing to elaborate on any questions you might have about appraisals in New Castle County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to request services from First State Appraisal Group, Inc.?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Once the assignment has been delivered, what assurance is there that the value conclusion is veritable?
How are appraisers certified?
Who engages the services of appraisers?
Where does First State Appraisal Group, Inc. get the information used to estimate values in New Castle County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Return to top)

The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured by using a formal method that commonly utilizes the three main "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. Another of the approaches is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (Return to top)

An appraiser generates an objective and well supported determination of market value, in the support of real property exchanges. Appraisers reveal the details of their investigation in appraisal reports.

What would cause me to request services from First State Appraisal Group, Inc.? (Return to top)

There are a lot of reasons to obtain an appraisal from First State Appraisal Group, Inc. with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:

If you are applying for a loan.
To lower your property taxes.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To challenge improperly assessed property taxes.
If you need to take care of an estate.
To give you an edge when purchasing a home.
To find a reasonable property value when putting your home on the market.
To defend 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 be involved in a lawsuit - an appraisal will definitely help.

If you need more information about the appraisal process, please click here.

How is an appraiser different than a home inspector? (Return to top)

Home inspectors do not estimate an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the property from bottom to rooftop. The standard house inspector's report will include an evaluation of the condition of the property's heating systems, 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.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Return to top)

Simply, they share nothing in common. The CMA depends on indefinite trends in the market. The appraisal is based on specific verifiable comparable sales. Area and architectural prices are also important in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person behind the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What does the appraisal report contain? (Return to top)

Every report must reflect a credible value opinion and will document the following:

The client and whose purposes the appraisal is to serve.
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 appraisal.
Relevant property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
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.
The scope of work considered when completing the appraisal.

For a more in depth view of what goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been delivered, what assurance is there that the value conclusion is veritable? (Return to top)

In communicating an appraisal report, each appraiser must ensure the following:

That the information analysis utilized in the appraisal was suitable.

Whether individually or collectively, there were no grave errors contained in the report, nor any relevant details left out.

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

That a believable, supportable appraisal report was conferred.

To become a state licensed appraiser, we must meet intense education and experience requirements that enable us to produce an unbiased opinion. Plus, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

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Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or she must then engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

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

Commonly, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does First State Appraisal Group, Inc. get the information used to estimate values in New Castle County or other areas? (Return to top)

One of the main tasks an appraiser must accomplish is to collect data. Data can be divided into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a many places. To find out about recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser assembles 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? (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. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by getting 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. Without knowing its real value, wise financial decisions are impossible.

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

PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan takes care of 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 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 dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than First State Appraisal Group, Inc. when it comes to analyzing real estate appreciation in Middletown and New Castle County. Contact us today.

Should I do anything in advance of the appraisal inspection (Return 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 features. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access 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:

Any information on the purchase of the property for the last three years.
List of personal property to be sold with the home.
Most recent real estate tax bill from New Castle and or legal description of the property.
A list of any major home improvements and enhancements, 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 "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"? (Return to top)

In real estate appraising, 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? (Return to top)

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 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 engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may state how the appraisal can be used; 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.

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

Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe move. 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%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.