Frequently Asked Questions

What does an appraiser do?

What does the term Market Value mean?

What does USPAP mean?

Are there different types of appraisals?

Can I have a copy of the appraisal?

What should I do if I disagree with the appraisal?

What can I do to increase the value of my home?

Who is qualified to appraise my home?

How much does an appraisal cost?

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

How long does an appraisal take?

What if my question isn't here?




What does an appraiser do?  

The fundamental role of an appraiser is to provide a professional opinion, usually an estimate of market value, to be used in making real estate decisions. Typically, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters, and investment decisions. The appraiser does not create value; rather, the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. However, this is only the beginning. Considerable research for collecting general and specific data must be accomplished before the appraiser can arrive at a final opinion of value.

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What does Market Value mean?

Market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, 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: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) 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.

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What does USPAP mean?

A term that you will see often when dealing with appraisals is USPAP.  The Uniform Standards of Professional Appraisal Practice are promulgated by the Appraisal Standards Board of The Appraisal Foundation. The standards establish requirements for professional appraisal practice. The standards also deal with the procedures to be followed in performing an appraisal, review, or consulting service and the manner in which an appraisal, review, or consulting service is communicated.

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Are there different types of appraisals?

Yes, there are several types.  The most common being Conventional, FHA, VA, REO (Repossession), ERC (Relocation), Commercial, Farm & Land,  Refinance, Full Narrative, Complete Appraisal of any type, and a Summary Report which is the most common appraisal done for home purchase. This type of appraisal is also called by several other names.  Lenders call it a URAR (Uniform Residential Appraisal Report), Full URAR, Summary or a 1004  which is the number of the form.  With the exception of a Full Narrative appraisal, this type of appraisal gives a lender the most information about your home.  This form uses 3 different ways to determine the value of your house.  (1) The Cost Approach: How much would it cost to replace the house?, (2) The Income Approach: How much would the house be worth as a rental property? and the most often used approach which is (3) The Sales Comparable Approach.  In the Sales Comparable Approach the appraiser researches all sales in your area and finds at least 3 sales in which the sold homes are most similar to your home.  Since homes are not identical in all respects the appraiser then makes monetary adjustments for the differences.  After all adjustments are tallied a value is determined based on these homes.  On this type of appraisal the appraiser may use 1, 2, 3 or any combination of  these approaches to determine final value.  The 1004 form is used for other types of appraisals also.  FHA, VA, REO, and Fannie Mae appraisals also use this form in conjunction with additional requirements.

Another very common appraisal that lenders order is more often used for refinance.  It is also called by several names.  Lenders may call it a Limited Appraisal, a Drive-By Appraisal or a 2055 which is the number of the form.  This appraisal is much less detailed than the 1004 form appraisal and only uses the Sales Comparison Approach.  This type of appraisal can be done 2 different ways which helps explain why it is sometimes called a Drive-By.  A 2055 Exterior Only appraisal does not require the appraiser to enter your home.  No sketch of the homes is done and no interior pictures are taken.  An appraiser is required only to "drive-by" the property and make his observations from the street.  There is also a 2055 Interior/Exterior appraisal.  This appraisal is done on the same form as the "Drive-By" but the appraiser enters your home, takes measurements, does do a sketch of your home and takes interior pictures. 

There are additional form used for the other types of appraisals.  Land Appraisals, ERC and Multi-Family Appraisals are all done on their own specific forms which share similarities with the common 1004 form. 

One uncommon type of appraisal which may be requested is a  Letter Appraisal.  A Letter Appraisal is a brief document detailing the findings of an appraiser in reporting a value estimate. Letter reports are seldom used due to the limited accuracy and minimal documentation provided. For example, occasionally, appraisers are asked to appraise a property which is soon to be foreclosed. The owner may refuse the appraiser access to property thereby preventing the appraiser from completing the assignment in full. In this instance, the lender will, in most cases, accept a letter appraisal report until the property is vacated.

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Can I have a copy of the appraisal?

If you paid for an appraisal of your property, you have the right to a copy of the appraisal. Under the Equal Credit Opportunity Act, your lender is compelled by federal law to furnish a copy of the appraisal report upon your written request. The copy must come from the lender, not the appraiser. The appraiser may provide a copy of the appraisal after written permission is given by the lender.

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What should I do if I disagree with the appraisal?

If you ordered the appraisal yourself, contact the appraiser and address your concerns. If someone else ordered the appraisal, have that individual contact the appraiser with your concerns.  If you have information that was not available to the appraiser or was not included in the report, provide the appraiser with the information so he or she may take it into consideration.  Often times a discussion of the specifics of an appraisal can alleviate your concerns.  For example, many home owners when seeing an appraisal do not understand why the roof they had put on just 2 years ago does not "show up" on the appraisal.  The simple answer is, you have a serviceable roof on your home.  You are expected to have this and the homes that your house was compared to also have serviceable roofs.  Another example could be an inground swimming pool.  You know that you paid $25,000 to have this pool installed but when you look at your appraisal you can see that the appraiser only gave you 'credit' for $10,000.  Extra amenities such as pools do not translate into full value at resale.  The amount that your appraiser gave you 'credit' for is the amount that a typical willing buyer would be willing to pay for that pool.  These amounts are determined by what is called "Paired Sales Analysis".  This means simply that if you have 2 very similar homes, 1 with a pool and 1 without, what was the difference in the actual sales price between those 2 homes. That amount is what a willing buyer was willing to pay to buy the house with the pool.   Pair Sales Analysis is used for many different amenities and  is not quite as simple as just 2 houses.  Appraisers note these differences and maintain a database of  the different amenities and what what willing buyers were willing to pay for these differences.

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What can I do to increase the value of my home?

As a rule of thumb, it is not financially wise to over improve beyond the other homes in your neighborhood. Few improvements increase the resale value of your home by the amount you put into them. Although some improvements such as modernization, energy efficient items, and amenities like decks and patios will help keep your resale value in the top end of the neighborhood range.  Keeping your home in good repair also can increase the value.  Repaint as needed, replace damaged or rotted exterior wood, keep windows and screens operating properly,  replace aged carpet and vinyl flooring as needed.  Each of these items can add to the "Condition" rating of your home.

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Who is qualified to appraise my home?

In 1991, the United States federal legislation passed a law requiring that real estate appraisers be licensed or certified by each state in which they wish to appraise certain types of "federally related real estate transactions." All 50 states have their own education, experience, and examination requirements for real estate licensing and certification.  In Texas specifically The Texas Appraiser Licensing and Certification Board (TALCB) was created by an act of the Texas Legislature in 1991 to license, certify and regulate real estate appraisers in Texas under state and federal laws. 

The TALCB regulates five classifications of appraiser certification and licensure:

                                                                                        Certified General Real Estate Appraiser
                                                                                        Certified Residential Real Estate Appraiser
                                                                                        State Licensed Real Estate Appraiser
                                                                                        Provisional Licensed Real Estate Appraiser
                                                                                        Appraiser Trainee 

All are able to appraise your home.  As you would expect,  a trainee's certified sponsor must “actively, personally, and diligently supervise an appraiser trainee under his or her sponsorship” and must sign the appraisal reports. The sponsor is responsible to the TALBC and to the public for the appraiser trainee's conduct.

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How much does an appraisal cost?

Appraisal fees are determined by the complexity of the assignment, not the value of the property. Each appraiser determines his or her own fee for a certain assignment. You should contact an appraiser, or several appraisers, for a fee quote on your appraisal. As you will find out, different appraisers may charge different fees for the same assignment. Be sure to take into consideration the appraisers' experience, education, background, etc. when deciding on which fee quote to accept. The cheapest appraisal may not be the best appraisal.  Our Price List is found here.

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

On conventional loans only, you may be required to pay PMI.

PMI stands for Private Mortgage Insurance. It insures the lender of conventional loans against loss on homes purchased with a down payment of less than 20%. Once equity in the home reaches 20% of the loan amount we recommend that you contact your lender to begin the process of eliminating your PMI. 

The Purpose Of Private Mortgage Insurance (PMI)

In most cases when you purchase a home with less than a 20% down payment, you may have Private Mortgage Insurance (PMI). The money is collected from you through the mortgage provider as part of your mortgage payment to insure the lender against potential loss should you default on the loan. However, once a homeowner has achieved 20% equity in their home, the mortgage holder/bank may release you from  paying PMI, if you meet their requirements.

PMI becomes a financial liability to homeowners if they do not take the initiative to discontinue it. Many homeowners are not aware that they are paying for it, let alone that it can be eliminated in many cases. Thousands of homeowners have needlessly paid many thousands of dollars over the entire term of their mortgage. PMI cost varies check with your mortgage holder. If the loan amount is $100,000 you may be paying $ 60.00-$ 70.00 dollars a month +/-.

In many cases the lender will allow cancellation of PMI when the loan-to-value ratio is less than 80% of the current appraised value. Typical requirements for release of PMI are as follows. The loan must be at least one year old, A good payment history in the past 12 months, loan balance has been paid below 80% and most lenders will also require a current appraisal showing the current market value. Remember you must have 20% equity in your property. These are just typical and common requirements contact your lender/mortgage company for further information on PMI removal.


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How long does an appraisal take?

Once an appraisal is ordered an appointment is usually made within a few days.  The appraiser will need to come to the home, take measurements, gather information, photograph rooms and discuss the property with you.  The time actually spent at the home varies from about an hour to several hours for complex properties or properties in bad repair. 

After the appointment the appraiser will need to gather information on at least 3 similar properties in your area and photograph them.  The appraiser then takes all pertinent information gathered and places them into the appropriate forms.  The completed appraisal is then sent to your lender, either by US Mail or E-mail.  The entire process takes approximately 7-10 business days.  Often the 7-10 day period is shorter, but always plan on an appraisal taking that amount of time.


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What if my question isn't here?

If you have a question that has not been addressed here, please contact us by e-mail or you may phone us at 1-800-742-6197.  We will be happy to answer any questions you might have.

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