Ed Schmidt Real Estate Services has answers to "Frequently Asked Questions"


	Ed Schmidt Real Estate Services is always ready to handle any inquiries you might have about appraisals or real estate in Fairfax County. Contact us today to talk about how we can help you with your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to require a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
After completing the report, how can I have a guarantee that the final number is legitimate?
What are the requirements to be a certified appraiser?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Fairfax County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (List of questions)

An appraisal is an evaluation that concludes with an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or estimate. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves discerning what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach involves searching for similar houses in close proximity and figuring out the value based on making a comparison of those properties to the home in question. The Sales Comparison Approach is normally the most definitive and best indicator of a liklely sales price for a residence. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to figure the value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do? (List of questions)

An appraiser forumlates a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers reveal the details of their expert investigation in appraisal reports.

What would cause me to require a real estate appraisal? (List of questions)

There are many reasons to order an appraisal from Ed Schmidt Real Estate Services with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:

To receive a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
To fight high property taxes.
To deal with an estate.
To provide you an edge when purchasing a home.
To find an honest price when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
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 help.

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? (List of questions)

Appraisers do not do provide house inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the property from basement to top. Usually, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical services, 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.

What is the difference between an appraisal and a comparative market analysis (CMA)? (List of questions)

Simply put, it's night and day. What the CMA relies upon are vague trends. The appraisal relies on specific verifiable comparable sales. Location and architectural prices are also precedent in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the price of the home.

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

The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:

The client and whose purposes the appraisal is to serve.
The intended use of the report.
The purpose of the appraisal.
The type of value reported and a definition of that value.
The effective date of the appraiser's opinions and conclusions.
Relevant property attributes, including: location, physical attributes, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
Any 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 considered to complete the job.

For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have a guarantee that the final number is legitimate? (List of questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

The appraisal used a suitable analysis of the information.

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

That appraisal services were provided in a careful and judicious fashion.

The final appraisal report was understandable, legitimate and conclusive.

To become a state licensed appraiser, we must meet considerable education and experience requirements that give us the background to produce an unbiased opinion. Plus, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification is achieved through classroom study, tests and real world experience. Once an appraiser is licensed, he/she must then engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers? (List of questions)

Most of the time, appraisers are called upon by lenders to estimate the value of 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 divorce and estate settlements.

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

Collecting information is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is collected from a number of sources. To look up recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

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

What can a full appraisal do for me? (List of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal will help you determine the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home 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? (List of questions)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan protects the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes 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 money you keep from dropping your PMI will make up for the price of the appraisal in a matter of months. Ed Schmidt Real Estate Services stays current with value trends in Falls Church and Fairfax County. Contact us today.

How do I get ready for the appraiser? (List of questions)

We begin with an inspection of the property. 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 features. 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 shrubs and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:

Written property agreements, such as a maintenance easement for a shared driveway.
List of personal property to be sold with the home.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
Most recent real estate tax bill from Fairfax and or legal description of the property.

How does an appraiser define "Market Value"? (List of questions)

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 actually owns the appraisal report? (List of questions)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 allowed to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, 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 do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating? (List of questions)

It really depends on the market. 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 best ROI from renovating a home comes in the kitchen. 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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.