Dexter Appraisal Services has answers to "Frequently Asked Questions"

Dexter Appraisal Services is more than happy to handle any inquiries you might have about appraisals or real estate in Lafayette and Tippecanoe County. Contact Dexter Appraisal Services today to talk about how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person require 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, how can I have certainty that the value conclusion is veritable?
What are the requirements to be a certified appraiser?
Who hires Dexter Appraisal Services
Where does an appraiser get the information used to estimate values in Tippecanoe 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?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Go to list of  questions)

An appraisal is an inspection that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. One of them is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparison to other similar properties within a close proximity which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a house. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (Go to list of  questions)

An appraiser generates a fair and credible determination of market value, in the support of real property exchanges. Appraisers exhibit their professional findings in appraisal reports.


Why would a person require a real estate appraisal?   (Go to list of  questions)

There are many reasons to purchase an appraisal from Dexter Appraisal Services with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:
  • To get a loan.
  • If you would like to lower your property tax obligations.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To provide you a leg-up when purchasing real estate.
  • To find an honest price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every property.
  • If you are ever involved in a civil case.
If you need more information regarding the appraisal process, please click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

Appraisers do not do provide residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the available structure and systems of a house, from the top to the bottom. The archetypal house inspector's report will contain an evaluation of the integrity of the house'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?   (Go to list of  questions)

Frankly, it's night and day. The CMA uses market trends to conduct most of their business. The appraisal relies on similar verifiable comparable sales. Area and building prices are also important in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person behind the report is actually the biggest difference between a CMA and an appraisal. 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 has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for work they perform, regardless of their value conclusion.

What are the contents of an appraisal report?   (Go to list of  questions)

The main objective of an appraisal report 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 purpose of the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the real property interest in question, 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 to complete the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, how can I have certainty that the value conclusion is veritable?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal contained an apropos analysis of the information.

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

  • That appraisal services were provided in a careful and judicious manner.

  • That a credible, defensible appraisal report was conferred.
To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be attained. Plus, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to list of  questions) Licensing and certification takes coursework, tests and practical experience. Once an appraiser is licensed, he/she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Dexter Appraisal Services   (Go to list of  questions)

Most of the time, appraisers are employed by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

Compiling data is one of the primary roles of an appraiser. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a numerous places. To look up recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely have 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 product.

And last but not least, the appraiser assimilates 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?   (Go to list of  questions)

An appraisal is a worthwhile anytime the value of your home is relevant to a financial decision. For those selling a home, you'll want to determine the 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 commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Dexter Appraisal Services is the best way to ensure assets are divided properly. A house 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?   (Go to list of  questions)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the home is lower 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 savings from dropping your PMI will make up for the price of the appraisal in no time. Dexter Appraisal Services is a name you can trust when it comes to real estate value trends in Lafayette and Tippecanoe County. Contact us today.

Should I do anything in advance of the appraisal appointment   (Go to list of  questions)

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

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • Any information on the purchase of the property for the last three years.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • Most recent real estate tax bill and or legal description of the property.

What is "Market Value?"   (Go to 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 actually owns the appraisal report?   (Go to list of  questions)

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 certainly 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.

This rule doesn't apply when a home owner hires an appraiser directly. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (Go to list of  questions)

This really depends on where the home is. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, yielding 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 an oddball for your neighborhood in terms of size.