Byrd Appraisal Group, Inc. has answers to "Frequently Asked Questions"

Byrd Appraisal Group, Inc. is always eager to answer any concerns you might have about appraisals in Woodway and McLennan County. Contact us today to talk about how we can help solve your specific valuation problems.

Describe an appraisal
Describe what an appraiser does
Why would a person require 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 can I expect to see in my appraisal report?
After completing the appraisal, what guarantee is there that the value conclusion is veritable?
How are appraisers certified?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in McLennan County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
What does "Market Value" mean?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Describe an appraisal   (Back to top)

The appraisal process is an evaluation that generates an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves finding what the improvements would cost without physical depreciation, adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with making a comparison to similar houses close by. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser generates an impartial and well justified assessment of market value, often in the context of a real estate sale. Appraisers illustate their conclusions in appraisal reports.

Why would a person require your services?   (Back to top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To fight inflated property taxes.
  • If you need to take care of an estate.
  • To give you a leg-up when purchasing a home.
  • To figure out an honest sales 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 property.
  • If you ever find yourself in a civil case.
If you need more information about the appraisal process, please click here.

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

Appraisers do not do perform home inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the home from bottom to attic. For the most part, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity 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?   (Back to top)

Simply put, it's like comparing opera to country. The CMA depends on indefinite trends in the market. The appraisal is reliant on similar definite comparable sales. Location and construction 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.

But the biggest difference is who's doing the report. 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 bases a career on valuing homes in and around McLennan County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their outcome.

What can I expect to see in my appraisal report?   (Back to top)

The main point 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 reason for the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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.
  • The scope of work used to complete the job.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report

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

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained analysis of the data.

  • Whether individually or collectively, there were no major errors contained in the appraisal, nor any material details left out.

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

  • That a solid, substantiated appraisal report was communicated.
To become a state licensed appraiser, there are intense education requirements as well as experience that must be attained - all with the end goal of gaining the skills required to render unbiased value opinions. 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 working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Back to top) Licensing and certification requires coursework, tests and experience working under a supervisor. Once licensed, he or she must then complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Back to top)

Mortgage lenders are an appraiser's most likely 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 hire appraisers for divorce and estate settlements.

Where does an appraiser get the information used to estimate values in McLennan County or other areas?   (Back to top)

Compiling data is one of the primary tasks an appraiser performs. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a many sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers often have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

How can a licensed appraiser help me?   (Back to top)

An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Byrd Appraisal Group, Inc. is the best way to ensure assets are divided evenly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. This added policy protects the lender in the event a borrower defaults on the loan and the market price of the home is lower than what is owed 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.

The savings from cancelling your PMI will make up for the price of the appraisal in a matter of months. Nobody is more qualified than Byrd Appraisal Group, Inc. when it comes to analyzing real estate appreciation in Woodway and McLennan County. Contact us today.

Does the appraiser need anything from me in advance?   (Back to top)

We begin 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 bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure we can get to appliances 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:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
  • 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 list of "proposed" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (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."

Who has rights to the appraisal report?   (Back 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 entitled to a copy of the appraisal - 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 hires an appraiser directly. 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 stated 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)

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

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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.