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Hornor Appraisal Company has answers to "Frequently Asked Questions"

Hornor Appraisal Company is ready to talk to you about any questions you might have about appraisals or real estate in Phillips County. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
Why would a person request your services?
What is the difference between an appraisal and 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?
After completing the report, how can I have assurance that the value conclusion is trustworthy?
How difficult is it to become certified?
Who employs appraisers?
Where does Hornor Appraisal Company get the data used to estimate values in Phillips County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Top)

The appraisal process is an evaluation that produces an opinion of value. The appraiser will use a several "approaches," typically three, to conclude the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the depreciation and physical dilapidation, plus the land value. The Sales Comparison Approach involves searching for similar homes in close proximity and discerning value based on making a comparison of those homes to the home in question. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.

What does an appraiser do?   (Top)

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


Why would a person request your services?   (Top)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
  • To fight improperly assessed property taxes.
  • If you need to settle an estate.
  • To offer you a negotiating tool when purchasing real estate.
  • To find the most probable property value when selling your home.
  • To protect 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 house.
  • If you are ever involved in a lawsuit.
If you need a more detailed explanation of the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (Top)

Home inspectors do not come to an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the available structure and systems of a house, from the top to the bottom. Generally, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Top)

Frankly, they share nothing in common. What the CMA depends on are vague trends. The appraisal depends on similar proven comparable sales. Also, the appraisal verifies other factors like condition, neighborhood and building prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is who's behind the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, whose income is tied to the price of the home.

What are the contents of an appraisal report?   (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, one will customarily see the following:
  • The client 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 value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property characteristics, including: location, physical description, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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.
  • What was included in the activity of completing the job.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report


After completing the report, how can I have assurance that the value conclusion is trustworthy?   (Top)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • That the information analysis implemented in the appraisal was suitable.

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

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

  • That a credible, supportable appraisal report was communicated.
There are intense education and experience requirements that must be satisfied in order to achieve the designation of "licensed appraiser" in Arkansas. Plus, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Licensing and certification is achieved through coursework, tests and experience working under a supervisory appraiser. Once licensed, he/she must then take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers?   (Top)

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

Where does Hornor Appraisal Company get the data used to estimate values in Phillips County or other areas?   (Top)

One of the most important activities of an appraiser is to collect property data. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

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


What can a full appraisal do for me?   (Top)

If you're making any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Hornor Appraisal Company is the best way to ensure assets are divided properly. A house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.


What exactly is PMI and how can I get rid of it?   (Top)

PMI is short for for Private Mortgage Insurance. This additional plan covers the lender in case a borrower doesn't pay on the loan and the value of the property is less than what is owed 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.

Has your real estate appreciated since you first purchased? Call Hornor Appraisal Company today at 8703386583. You may be able to get rid of your Private Mortgage Insurance payment.

Does the appraiser need anything from the homeowner in advance?   (Top)

We start with an inspection of the home. 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. 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 landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to items like furnaces and water heaters.

To help speed things along 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 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.
  • Most recent real estate tax bill and or legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • 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"?   (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)

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 report - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.


Which home renovations add the most to the price?   (Top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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, 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 atypical for your neighborhood in terms of size.