Julian Appraisals & Consulting has answers to "Frequently Asked Questions"


	Julian Appraisals & Consulting is always happy to elaborate on any concerns you might have about appraisals or real estate in Carrboro and Orange County. Contact Julian Appraisals & Consulting today to learn how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
What would cause me to request services from Julian Appraisals & Consulting?
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?
After completing the report, how can I have assurance that the value indicated is veritable?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does Julian Appraisals & Consulting get the information used to estimate values in Orange County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What is "Market Value?"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (Back to top)

The method of creating an appraisal report deals with an investigation which forms an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or valuation. One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the home, less the age and physical dilapidation, adding the land value. The Sales Comparison Approach involves finding comparable homes nearby and finding value based on making a comparison of those homes to the home being investigated. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a house. The Income Approach is primarily used for figuring out 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.

Describe what an appraiser does (Back to top)

An appraiser offers a fair and credible opinion of market value, in the support of real estate exchanges. Appraisers illustate their conclusions in appraisal reports.

What would cause me to request services from Julian Appraisals & Consulting? (Back to top)

There are a lot of reasons to get an appraisal from Julian Appraisals & Consulting with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal report include:

To get a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight high property taxes.
If you need to take care of an estate.
To give you a negotiating tool when purchasing real estate.
To find a likely price 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 ever find yourself in a civil case.

For a more detailed description of the appraisal process click here.

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

Appraisers do not do provide house inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the home from basement to top. Commonly, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical systems, 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 visible structures.

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

Simply put, it's apples and oranges. The CMA relies on vague local market trends. The appraisal depends on similar verifiable comparable sales. The appraisal report will also contain area and building prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is hands down 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. A certified, North Carolina licensed professional who has formed their livelihood on valuing homes in and around Orange County creates the appraisal. 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 previously agreed upon fee for work they perform, regardless of their outcome.

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

Each report must indicate a believable value opinion and should identify the following:

The client and other intended users.
The intended use of the report.
The appraisal's purpose.
The type of value contained and a definition of that value.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
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 used to complete the appraisal.

For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have assurance that the value indicated is veritable? (Back to top)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used a suitable analysis of the information.

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

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

The final appraisal report was easy to explain, legitimate and conclusive.

To become a state licensed appraiser, we must satisfy extensive education and experience requirements that enable us to formulate an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Licensing and certification is achieved through coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he/she is required to complete continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

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

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Julian Appraisals & Consulting get the information used to estimate values in Orange County or other areas? (Back to top)

One of the main activities of an appraiser is to collect property data. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a number of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.

What can a full appraisal do for me? (Back to top)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out 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. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. This added policy covers the lender in case a borrower is unable to pay on the loan and the value of the property is less 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.


	Is PMI something increasing your monthly mortgage payment?Call Julian Appraisals & Consulting today at (919) 929-9313 or send us an e-mail. Documentation of your home's present value could save you thousands.

How do I get ready for the appraiser? (Back to 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 the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances 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 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.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?" (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."

Who has rights to the appraisal report? (Back to top)

For mortgage transactions, the lender requests 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 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 situations, 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 use the appraisal for any purpose.

I want to get more for my house. Where should I spend money renovating? (Back to top)

The answer to this is different depending upon the location of the home. For example, putting in 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.

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