Smith & Connerley has answers to "Frequently Asked Questions"


	Smith & Connerley is prepared to answer any concerns you might have about appraisals or real estate in Greenwood and Johnson County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would need services from Smith & Connerley?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Upon completion of the report, what assurance is there that the value conclusion is legitimate?
What are the requirements to be a certified appraiser?
Who do appraisers work for?
Where does Smith & Connerley get the data used to estimate values in Johnson 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 inspection
What is "Market Value?"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Describe an appraisal (Top)

An appraisal report is a thought process that concludes with an opinion of value. The appraiser must use a several "approaches," typically three, to come to the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the home, minus age and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with making a comparison to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is generally 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.

Describe what an appraiser does (Top)

An appraiser produces a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers illustate their expert findings in appraisal reports.

What are the reasons a person would need services from Smith & Connerley? (Top)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an report include:

To get a loan.
If you would like to reduce your property tax obligations.
To build a case for a homeowner's equity and remove PMI.
To contest inflated property taxes.
To handle an estate.
To offer you a leg-up when purchasing a home.
To determine a likely 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 a government agency such as the IRS requires it.
If you are ever involved in a lawsuit.

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

Is an appraisal the same as a home inspection? (Top)

Home inspectors do not estimate an opinion of value and are not appraisers. An inspection is a third-party investigation of the livable structure and mechanical systems of a home, from the roof to the foundation. The archetypal house inspector's report will include an evaluation of the condition of the property'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.

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

Simply, they share nothing in common. The CMA utilizes market trends to create most of their business. The appraisal is reliant on similar definite comparable sales. The appraisal report will also include area and building values. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is who's creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, state licensed professional who bases their livelihood on valuing homes in and around Johnson County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.

What does the appraisal report contain? (Top)

The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:

The client and other intended users.
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 appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
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.
What was involved in the process of completing the job.

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

Upon completion of the report, what assurance is there that the value conclusion is legitimate? (Top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:

That the information analysis contained in the appraisal was appropriate.

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

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

That a trustworthy, supportable appraisal report was communicated.

There are intense education and on the job experience requirements that must be fulfilled in order to get an appraisal license in Indiana. Likewise, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Top) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he or 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 do appraisers work for? (Top)

Mortgage lenders are an appraiser's typical customer, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Smith & Connerley get the data used to estimate values in Johnson County or other areas? (Top)

One of the most important activities of an appraiser is to collect property data. 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 documented by the appraiser while on site.

General data is gathered from a numerous sources. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

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

How can a licensed appraiser help me? (Top)

An appraisal is a worthwhile whenever your home's value is pertinent to some financial decision. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Smith & Connerley is the best way to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. It takes care of the lender in case a borrower defaults on the loan and the value of the home is less than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Smith & Connerley when it comes to analyzing real estate appreciation in Greenwood and Johnson County. Contact us today.

Should I do anything in advance of the appraisal inspection (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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access 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:

Any records on the purchase of the property for the last three years.
Title policy that describes encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements when the property is being appraised "as complete".

What is "Market Value?" (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? (Top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 allowed 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 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 use the appraisal for any purpose.

How can I get the most ROI out of home improvements? (Top)

It really depends on the market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, yielding 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 atypical for your neighborhood in terms of size.