Tradewater Appraisal & Realty has answers to "Frequently Asked Questions"

Tradewater Appraisal & Realty is always ready to handle any inquiries you might have about appraisals or real estate in Providence and Hopkins County. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
Why would someone request your services?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Once the report has been completed, what assurance is there that the value indicated is veritable?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Hopkins County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Describe an appraisal   (List of questions)

The process of creating an appraisal consists of an evaluation which leads to an opinion of value. The real estate appraiser will use a few "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, less the depreciation and physical dilapidation, adding the land value. The Sales Comparison Approach deals with searching for comparable houses nearby and finding value based on making a comparison of those prior sales to the property being appraised. The Sales Comparison Approach is normally the most definitive and best indicator of value for a residential property. The Income Approach is mainly used for figuring out 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.

What does an appraiser do?   (List of questions)

An appraiser produces an impartial and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers illustate their professional investigation in appraisal reports.


Why would someone request your services?   (List of questions)

There are a lot of reasons to get an appraisal from Tradewater Appraisal & Realty with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To show a homeowner has 30% equity and remove insurance.
  • To fight improperly assessed property taxes.
  • To deal with an estate.
  • To give you a negotiating tool when purchasing a home.
  • To determine a likely property value 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 have to deal with being in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process involved in getting an appraisal.


How is an appraisal different than a home inspection?   (List of questions)

The appraiser is not a home inspector nor does he/she do a full home inspection. An inspection is a third-party investigation of the available structure and electrical and mechanical systems of a house, from the roof to the bottom. The stereotypical house inspector's report will contain an evaluation of the condition 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?   (List of questions)

Simply put, it's like comparing opera to country. What the CMA depends on are superficial trends. The appraisal depends on specific verifiable comparable sales. In addition, the appraisal checks other factors like condition, location and construction costs. 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.

But the largest differentiator is who's creating the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Kentucky licensed professional who bases their livelihood on valuing real estate in and around Hopkins County is behind 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 collect only a flat fee for work they perform, regardless of their value conclusion.

What are the contents of an appraisal report?   (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.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • The type of value contained and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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 considered when completing the assignment.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, what assurance is there that the value indicated is veritable?   (List of questions)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • That the information analysis utilized in the appraisal was appropriate.

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

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

  • The final appraisal report was understandable, legitimate and conclusive.
There are intense education and experience requirements that must be adhered to in order to achieve the status of "licensed appraiser" in Kentucky. Likewise, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (List of questions) Licensing and certification requires classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she must then complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (List of questions)

Most of the time, appraisers are called upon by lenders to render a value opinion on a house involved in a loan transaction - to make sure the subject 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 data used to estimate values in Hopkins County or other areas?   (List of questions)

Gathering information is one of the main tasks an appraiser does. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a number of places. To research recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

What can a full appraisal do for me?   (List of questions)

If you're making any kind of financial decision and the value of your home matters, you'll want an appraisal. For those selling a home, you'll want to figure out 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. 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?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. PMI takes care of the lender if a borrower is unable to pay on the loan and the value of the property is lower than what the borrower still owes on 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.

The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Tradewater Appraisal & Realty stays current with value trends in Providence and Hopkins County. Contact us today.

Should I do anything in advance of the appraisal inspection   (List of questions)

We begin with an inspection of the home. 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 status of its amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any shrubs and relocate any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to items 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:
  • A plot plan or survey of the house and land (if available).
  • A list of any personal property that is part of the home and you intend to be 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 enhancements, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser define "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 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 hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may define the purpose of the appraisal; 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.

Which home renovations add the most to the price?   (List of questions)

Like all things real estate, this is dependent on a home's location. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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 weren't far behind, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.