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Knight Appraisal Service, LLC has answers to "Frequently Asked Questions"

Knight Appraisal Service, LLC is ready to answer any concerns you might have about appraisals or real estate in Gulf Shores and Baldwin County. Contact Knight Appraisal Service, LLC today to learn how we can help you with your valuation problems.

Describe an appraisal
What does an appraiser do?
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's in an appraisal report?
Upon completion of the appraisal, how can I have assurance that the value indicated is valid?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Baldwin County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
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?



Describe an appraisal   (Top)

An appraiser provides an estimation that produces an opinion of value. There are three "common approaches to value" which assists the real estate appraiser arrive at this opinion or estimate. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, less the age and physical deterioration, plus the land value. Easily the most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which concerns figuring a comparison to comparable houses close by. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a home. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Top)

An appraiser forumlates a fair and credible assessment of market value, often in the context of a real estate sale. Appraisers document their professional investigation in appraisal reports.


What are the reasons a person would request a real estate appraisal?   (Top)

There are a lot of reasons to obtain an appraisal from Knight Appraisal Service, LLC with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • If you need to settle an estate.
  • To offer you an edge when purchasing a home.
  • To figure out a likely 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.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraisal different than a home inspection?   (Top)

The appraiser is not a home inspector nor does he/she do a full home inspection. The point of a home inspection is to evaluate the structure of the home from basement to top. Usually, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

Simply, they share nothing in common. What the CMA relies upon are ill-defined trends. An appraisal utilizes comparable sales that can be verified by records. Area and building values are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, Alabama licensed professional who bases their livelihood on valuing properties in and around Baldwin County creates the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the value of the home.

What's in an appraisal report?   (Top)

The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, 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 items.
  • Any 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 detailed look at what goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the appraisal, how can I have assurance that the value indicated is valid?   (Top)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis contained in the appraisal was suitable.

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

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

  • The final appraisal report was understandable, credible and not easily discredited.
To become a state licensed appraiser, there are extensive education requirements as well as experience that must be logged - all with the objective of gaining the skills required to render unbiased value opinions. Likewise, appraisers must obey a strict 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 guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top)

Licensing and certification is achieved through classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state
click here.

Who engages the services of appraisers?   (Top)

Mortgage lenders are an appraiser's most likely client, requesting their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Baldwin County or other areas?   (Top)

Gathering information is one of the main things an appraiser engages in. Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is collected from a many places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. To verify actual sales prices, we look at tax records and other public documents. Appraisers often have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.


How can a licensed appraiser help me?   (Top)

If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. For those selling a home, you'll want to determine 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. For those settling an estate or divorce, an appraisal from Knight Appraisal Service, LLC is the best documentation to ensure assets are divided evenly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


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

PMI is the common abbreviation for for Private Mortgage Insurance. PMI protects the lender in case a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The amount you keep from getting rid of the PMI required when you got your mortgage pays for the appraisal in no time. Knight Appraisal Service, LLC is a name you can trust when it comes to value trends in Gulf Shores and Baldwin County. Contact us today.

How do I get ready for the appraiser?   (Top)

The first step in most appraisals is the property 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. Is there anything you can do to help? Yes there is! First, be 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 make it difficult to measure the structure. Indoors, make sure we can get to appliances like furnaces and water heaters.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if available).
  • List of personal property to be sold with the home.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

What does "Market Value" mean?   (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."



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

The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate 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?   (Top)

It really depends on the market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the best ROI 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, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.