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TerCorp, Inc. has answers to "Frequently Asked Questions"

TerCorp, Inc. is eager to address any concerns you might have about appraisals in Travis County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would someone need services from TerCorp, Inc.?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the appraisal, how can I have certainty that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who do appraisers work for?
Where does TerCorp, Inc. get the data used to estimate values in Travis County or other areas?
What can a full appraisal do for 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 does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

Define the term "Appraisal"   (Return to top)

An appraisal report is an estimation that concludes with an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to draw up 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. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable houses nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a house. The Income Approach is primarily used for finding the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

Describe what an appraiser does   (Return to top)

An appraiser offers a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their expert conclusions in appraisal reports.

Why would someone need services from TerCorp, Inc.?   (Return to top)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
  • To get a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To challenge improperly assessed property taxes.
  • To handle an estate.
  • To offer you an edge when purchasing a home.
  • To determine a reasonable sales 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.
  • Government agencies such as the IRS need an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
For a more detailed description of the appraisal process click here.

Is an appraisal the same as a home inspection?   (Return to top)

The appraiser is not a home inspector and does not do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the house from foundation to rooftop. The stereotypical house inspector's report will contain an evaluation of the condition of the house's heating system, 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.

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

To be blunt, it's like comparing Shakespeare to reality TV. What the CMA relies upon are vague trends. The appraisal is based on specific verifiable comparable sales. The appraisal report will also contain location and building prices. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is who's doing the report. 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, Texas licensed professional who made a career on valuing properties in and around Travis County creates the appraisal. Moreover, the appraiser is an unbiased voice, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.

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

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily 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 appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • All 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 while working up the job.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, how can I have certainty that the value indicated is trustworthy?   (Return to top)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained an appropriate analysis of the information.

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

  • That appraisal services were delivered in a careful and conscientious manner.

  • That a trustworthy, defensible appraisal report was conferred.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to formulate an unbiased opinion. Plus, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Return to top) Licensing and certification is achieved through classroom study, tests and experience working under a supervisory appraiser. Once licensed, he/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?   (Return to top)

Mortgage lenders are an appraiser's typical customer, using their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does TerCorp, Inc. get the data used to estimate values in Travis County or other areas?   (Return to top)

Compiling information is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is gathered from a many places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely 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 product.

And most importantly, the appraiser assembles 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?   (Return to top)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.

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

PMI is short for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the value of the home is less 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.

Is PMI a lineitem in your monthly house payment?Call TerCorp, Inc. today at (512) 261-4881 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 inspection   (Return 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 find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • A plot plan or survey of the house and land (if readily available).
  • 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.
  • Title policy that describes encroachments or easements.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades 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".

What does "Market Value" mean?   (Return 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."

Does the appraisal belong to the bank or the consumer?   (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. 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 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.

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

Are some home improvements more worthwhile than others?   (Return to top)

The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the most value returned 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, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.