Faulkner Appraisal Services, Inc. has answers to "Frequently Asked Questions"


	Faulkner Appraisal Services, Inc. is always ready to talk to you about any concerns you might have about appraisals in Wake County. Contact Faulkner Appraisal Services, Inc. today to talk about how we can help solve your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
Why would someone request services from Faulkner Appraisal Services, Inc.?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the appraisal has been completed, what assurance is there that the final number is accurate?
How are appraisers certified?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Wake 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 appointment
What is "Market Value?"
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Back to top)

An appraiser provides an estimation that leads to an opinion of value. This opinion or estimate is figured by using a formal method that generally uses the three main "common approaches to value". The Cost Approach is one of the methods that appraisers use to find value; it involves discerning what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach involves finding comparable homes nearby and finding value based on making a comparison of those houses to the property being appraised. Being the most popular approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a home. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

Describe what an appraiser does (Back to top)

An appraiser produces an unprejudiced and well justified opinion of market value, in the support of real estate transactions. Appraisers present their expert analysis in appraisal reports.

Why would someone request services from Faulkner Appraisal Services, Inc.? (Back to top)

There are many reasons to order an appraisal from Faulkner Appraisal Services, Inc. with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an report include:

If you are applying for a loan.
If you would like to lower your property tax burden.
To demonstrate a homeowner's acquired equity and remove PMI.
To contest improperly assessed property taxes.
To handle an estate.
To give you a leg-up when purchasing a home.
To find the most probable price when selling real estate.
To protect 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 help.

Click here for a more detailed explanation of the process involved in getting an appraisal.

What is the difference between an appraisal and a home inspection? (Back to top)

The appraiser is not a home inspector nor does he/she do a complete home inspection. A third-party home inspector will inspect the structure of the property, from the top to the foundation. Generally, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Back to top)

To be blunt, it's apples and oranges. The CMA utilizes market trends to conduct most of their business. The appraisal is reliant on similar definite comparable sales. The appraisal report will also include neighborhood and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The person behind the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, North Carolina licensed professional who bases a career on valuing real estate in and around Wake County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their outcome.

What's in an appraisal report? (Back to top)

Every report should indicate a supported value opinion and will identify the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The reason for the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical attributes, 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 considerations.
Any 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 job.

For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, what assurance is there that the final number is accurate? (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:

That the information analysis contained in the appraisal was suitable.

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

That appraisal services were done in a careful and cognizant fashion.

The final appraisal report was easy to explain, credible and not easily discredited.

There are rigorous education and on the job experience requirements that must be adhered to in order to get an appraisal license in North Carolina. In addition, appraisers must obey a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once licensed, he/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? (Back to top)

Typically, appraisers are employed by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the data used to estimate values in Wake County or other areas? (Back to top)

One of the most important tasks an appraiser performs is to collect property data. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

How can a licensed appraiser help me? (Back to top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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 house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental plan guards the lender in the event a borrower defaults on the loan and the value of the house is lower than the balance of the loan. 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.


	Does your monthly mortgage payment include a fee for PMI?Call Faulkner Appraisal Services, Inc. today at 919-412-3319 or send us an e-mail. Documentation of your home's present value could save you thousands.

Should I do anything in advance of the appraisal appointment (Back 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 condition of its features. On the home's interior, pick up any clutter and make sure we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:

Written property agreements, such as a maintenance easement for a shared driveway.
List of personal property to be sold with the home.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A list of "proposed" improvements if the property is to be appraised "as complete".

What is "Market Value?" (Back 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 actually owns the appraisal report? (Back 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 certainly 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.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. 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.

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

Like all things real estate, this is dependent on a home's location. 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.

As a rule, the best ROI from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms were second, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.