J.S. Appraisals, Inc. has answers to "Frequently Asked Questions"


	J.S. Appraisals, Inc. is always willing to talk to you about any questions you might have about appraisals in Wheaton and Dupage County. Contact us today to talk about how we can help solve your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to request services from J.S. Appraisals, Inc.?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the report has been completed, how can I have certainty that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does J.S. Appraisals, Inc. get the data used to estimate values in Dupage County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "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? (Return to top)

The method of creating an appraisal report consists of an inspection which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves concluding what the improvements would cost without physical deterioration, plus the land value. Easily the most common approach in figuring the value of a house is the Sales Comparison Approach which deals with making a comparison to similar homes close by. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residence. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (Return to top)

An appraiser generates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their professional conclusions in appraisal reports.

What would cause me to request services from J.S. Appraisals, Inc.? (Return to top)

There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:

To obtain a loan.
If you would like to lower your property tax obligations.
To show a homeowner has 30% equity and remove insurance.
To contest high property taxes.
To handle an estate.
To provide you an edge when purchasing real estate.
To figure out an honest sales price when listing your home.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

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

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

Home inspectors do not produce an opinion of value and are not appraisers. A third-party home inspector will judge the structure of the home, from the top to the foundation. For the most part, a home inspection report will discuss the amenities and the necessities of the house: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Simply put, it's night and day. The CMA depends on indefinite market trends. Appraisals use similar sales which are verifiable resources. Area and architectural prices are also precedent 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.

Who's behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the value of the home.

What are the contents of an appraisal report? (Return to top)

Each appraisal must demonstrate a credible value opinion and should identify the following:

The client and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The appraisal's purpose.
The type of value reported 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 real property interest valued, and non-real estate items included in the valuation, 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.
What was involved in the activity of completing the job.

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

Once the report has been completed, how can I have certainty that the value indicated is trustworthy? (Return to top)

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

The appraisal used an apropos analysis of the information.

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

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

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

There are intense education and experience requirements that must be adhered to in order to get an appraisal license in Illinois. Likewise, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and practical experience. Once an appraiser is 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 engages the services of appraisers? (Return to top)

Commonly, appraisers are called upon by mortgage lenders to estimate the value of real estate involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does J.S. Appraisals, Inc. get the data used to estimate values in Dupage County or other areas? (Return to top)

Gathering data is one of the primary functions of an appraiser. Data can be categorized 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 sources. To research recently sold homes to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

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

Why should I hire a licensed appraiser? (Return to top)

If you're making some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. When selling your home, an appraisal will help you determine 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 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? (Return to top)

PMI is short for for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the market price of the property is less than what the borrower still owes 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.


	Did you have less than 20% to put down on your mortgage? Call J.S. Appraisals, Inc. today at (847) 910-7550 to see if you can cancel your Private Mortgage Insurance payment.

How do I get ready for the appraiser? (Return 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

A plot plan or survey of the house and land (if available).
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

Define "Market Value" (Return 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 has rights to the appraisal report? (Return 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 appraisal - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated 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? (Return to top)

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.

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%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.