Commercial Resource Group has answers to "Frequently Asked Questions"

Commercial Resource Group is eager to talk to you about any inquiries you might have about appraisals in Valparaiso and Porter County. Contact us today to see how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone need 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 can I expect to see in my appraisal report?
After completing the appraisal, how can I have confidence that the value conclusion is accurate?
How difficult is it to become certified?
Who hires an appraiser?
Where does an appraiser get the data used to estimate values in Porter 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
What does "Market Value" mean?
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



Define the term "Appraisal"   (List of questions)

An appraisal is a thought process allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the house, minus depreciation and physical dilapidation, plus the land value. The Sales Comparison Approach deals with finding comparable houses in close proximity and finding value based on comparing those prior sales to the house being appraised. Being the most common approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residence. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do?   (List of questions)

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


Why would someone need a real estate appraisal?   (List of questions)

There are many reasons to get an appraisal from Commercial Resource Group with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
  • To get a loan.
  • To lower your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To contest improperly assessed property taxes.
  • To deal with an estate.
  • To provide you a negotiating tool when purchasing real estate.
  • To determine a likely sales price when selling your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • 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 definitely help.
For a more extensive description of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (List of questions)

Home inspectors do not figure out an opinion of value and are not appraisers. A third-party home inspector will evaluate the structure of the house, from the roof to the bottom. The standard house inspector's report will include an evaluation of the integrity 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (List of questions)

Simply put, it's apples and oranges. What the CMA depends on are ill-defined trends. Appraisals use similar sales which are valid resources. The appraisal report will also include area and construction prices. 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.

Who's behind the report is hands down the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Indiana licensed professional who made their livelihood on valuing real estate in and around Porter County is behind the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.

What can I expect to see in my appraisal report?   (List of questions)

The main point of an appraisal report is to give 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 report.
  • The appraisal's purpose.
  • 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 real property interest in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
  • 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.
  • What was entailed in the process of completing the appraisal.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, how can I have confidence that the value conclusion is accurate?   (List of questions)

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

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

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

  • The final appraisal report was understandable, credible and not easily discredited.
To become a state licensed appraiser, we must meet considerable education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must abide by a meticulous industry code of ethics and comply with 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).


   (List of questions) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she is required to complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who hires an appraiser?   (List of questions)

Commonly, appraisers are employed by lenders to render a value opinion on a home involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the data used to estimate values in Porter County or other areas?   (List of questions)

One of the main activities of an appraiser is to collect data. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

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

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


Why should I hire a licensed appraiser?   (List of questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine 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. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Commercial Resource Group is the best way to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.


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

PMI is short for for Private Mortgage Insurance. It guards the lender in the event a borrower defaults on the loan and the market price of the house is lower 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.

The amount you keep from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Commercial Resource Group is in the business of tracking real estate value trends in Valparaiso and Porter County. Contact us today.

Should I do anything in advance of the appraisal inspection   (List of questions)

The first step in most appraisals is the property 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 amenities. 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 landscaping so we can be free to get an accurate measurement of outside walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • Information on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • 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 wells.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

What does "Market Value" mean?   (List of questions)

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."



Who has rights to the appraisal report?   (List of questions)

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 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may state 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 use the appraisal for any purpose.


Are some home improvements more worthwhile than others?   (List of questions)

It really depends on the market. For example, putting in 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 weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.