Houston Appraisal Group has answers to "Frequently Asked Questions"


	Houston Appraisal Group is always willing to handle any inquiries you might have about appraisals in Katy and Fort Bend County. Contact Houston Appraisal Group today to see how we can help you with your specific valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would I require a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal is done, what guarantee is there that the value conclusion is veritable?
How hard is it to become certified?
Who are an appraiser's customers?
Where does Houston Appraisal Group get the information used to estimate values in Fort Bend County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Back to top)

The appraisal process is an estimation that produces an opinion of value. The real estate appraiser will typically use a number of "approaches," typically three, to draw up 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 age and physical dilapidation, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of value for a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.

What does an appraiser do? (Back to top)

An appraiser produces a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers demonstrate their expert findings in appraisal reports.

Why would I require a real estate appraisal? (Back to top)

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

If you are applying for a loan.
If you would like to reduce your property tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To challenge high property taxes.
If you need to take care of an estate.
To provide you a leg-up when purchasing a home.
To figure out a likely price when putting your home on the market.
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 home.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

For a more extensive explanation of the appraisal process click here.

What is the difference between an appraisal and a home inspection? (Back to top)

Home inspectors do not provide an opinion of value and are not appraisers. An inspection is a third-party evaluation of the accessible structure and systems of a house, from the roof to the bottom. For the most part, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Simply, they have nothing in common. What the CMA depends on are superficial trends. An appraisal utilizes comparable sales that can be verified by public record. Location and building costs are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Texas licensed professional who made their livelihood on valuing properties in and around Fort Bend County creates the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the price of the home.

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

Every appraisal should indicate a credible value opinion and must document the following:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The purpose of the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property attributes, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
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.
The scope of work used to complete the appraisal.

For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal is done, what guarantee is there that the value conclusion is veritable? (Back to top)

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

The appraisal contained an apropos analysis of the data.

That grave 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 credible, defensible appraisal report was imparted.

There are intense education and real world experience requirements that must be adhered to in order to become a licensed appraiser in Texas. In addition, appraisers must abide by a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Licensing and certification takes classroom study, tests and real world experience. Once an appraiser is licensed, he/she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Back to top)

Mortgage lenders are an appraiser's typical client, needing their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Houston Appraisal Group get the information used to estimate values in Fort Bend County or other areas? (Back to top)

One of the most important activities of an appraiser is to compile data. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a number of places. To look up recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers often have 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 collective knowledge gained from creating appraisals for other houses in the same market.

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

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Houston Appraisal Group is the best way to ensure assets are divided properly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (Back to top)

PMI is an acronym for Private Mortgage Insurance. It guards the lender if a borrower is unable to pay on the loan and the value of the house is lower than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The amount you keep from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Houston Appraisal Group when it comes to analyzing real estate appreciation in Katy and Fort Bend County. Contact us today.

Should I do anything in advance of the appraisal inspection (Back to top)

We start with an inspection of the home. During this process, we 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would get in our way while we measure the structure. On the inside, make sure we can get to items like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:

Written property agreements, such as a maintenance agreement for a shared driveway.
Title policy that lists encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A bill for your most recent real estate taxes which should also contain a legal description of the property.

Define "Market Value" (Back 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? (Back 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 entitled to a copy of the appraisal - 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate the purpose of the appraisal; 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.

How can I get the most ROI out of home improvements? (Back to top)

The answer to this is different depending upon the location of the home. 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.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.