Lundquist Appraisals & Real Estate Services has answers to "Frequently Asked Questions"

Lundquist Appraisals & Real Estate Services is ready to talk to you about any questions you might have about appraisals or real estate in Wabash and Wabash County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would request your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Upon completion of the report, what guarantee is there that the value indicated is valid?
What goes into an appraiser's certification?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Wabash County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



Define the term "Appraisal"   (List of questions)

An appraisal is an estimation that concludes with an opinion of value. This opinion or estimate is figured through a formal method that usually utilizes the three main "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the home, minus depreciation and physical deterioration, plus the land value. The Sales Comparison Approach involves searching for similar properties in the vicinity and figuring out the value based on comparing those properties to the property in question. Being the most common approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (List of questions)

An appraiser provides a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers reveal the details of their professional investigation in appraisal reports.


What are the reasons I would request your services?   (List of questions)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report 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 inflated property taxes.
  • If you need to settle an estate.
  • To provide you an edge when purchasing real estate.
  • To determine the most probable sales price when selling real estate.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS require an appraisal on every home.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process of getting an appraisal.


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

The appraiser is not a home inspector and he or she does not do a full home inspection. The purpose of a home inspection is to evaluate the structure of the property from basement to top. The standard home inspector's report will contain 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.

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

To be blunt, it's apples and oranges. The CMA depends on indistinct trends in the market. The appraisal is based on specific proven comparable sales. The appraisal report will also contain location and building values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is who's doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is produce 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 accept a flat sum for assignments, regardless of their outcome.

What can I expect to see in my appraisal report?   (List of questions)

The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The reason for the assignment.
  • 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 attributes, 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 other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was included in the activity of completing the appraisal.
For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

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

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal used an appropriate analysis of the information.

  • Whether individually or collectively, there were no major errors contained in the report, nor any material details left out.

  • That appraisal services were done in a careful and cognizant manner.

  • The final appraisal report was easy to explain, credible and not easily discredited.
To become a state licensed appraiser, there are intense education requirements as well as experience that must be attained. Likewise, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (List of questions) Licensing and certification takes coursework, tests and real world experience. Once licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (List of questions)

Mortgage lenders are an appraiser's typical client, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

One of the most important activities of an appraiser is to gather data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a number of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Appraisers routinely 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 service.

And last but not least, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

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

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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. Simply put, 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?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. This additional policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property is lower 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.

Does your monthly house payment have a lineitem for PMI?Call Lundquist Appraisals & Real Estate Services today at 260-563-2812 or send us an e-mail. A new appraisal could save you thousands.

Do you need anything from the homeowner in advance?   (List of questions)

The first step in most appraisals is the home inspection. During this process, we 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 (gates aren't locked, etc). Trim any shrubs and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.

You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Any records 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 a oven, or a washer and dryer, if applicable.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Brag sheet that lists 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).
  • Information on "Homeowners Associations" or condominium covenants and fees.

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."

Does the appraisal belong to the bank or the consumer?   (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 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.

It's different when it's the homeowner hiring 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 stated otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others?   (List of questions)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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 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 were second, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.