Lane, Clark & Company has answers to "Frequently Asked Questions"


	Lane, Clark & Company is always eager to handle any concerns you might have about appraisals or real estate in Savannah and Chatham County. Contact Lane, Clark & Company today to learn how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would a person request 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 does the appraisal report contain?
After completing the report, how can I have assurance that the value conclusion is veritable?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does Lane, Clark & Company get the information used to estimate values in Chatham County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Does the appraiser need anything from me in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Define the term "Appraisal" (Back to top)

An appraisal is an inspection that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves finding what the improvements would cost minus physical degradation, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a house. 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 income produced by the property.

What does an appraiser do? (Back to top)

An appraiser produces a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers demonstrate their findings in appraisal reports.

Why would a person request a real estate appraisal? (Back to top)

There are many reasons to purchase an appraisal from Lane, Clark & Company with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:

If you are applying for a loan.
If you would like to lower your property tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To challenge high property taxes.
If you need to settle an estate.
To offer you a leg-up when purchasing real estate.
To determine the most probable property value when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require 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)

The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party investigation of the livable structure and mechanical systems of a house, from the roof to the foundation. Usually, a home inspection report will discuss the amenities and the necessities of the property: 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, visible 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 share nothing in common. The CMA depends on indefinite local market trends. An appraisal utilizes comparable sales that can be verified by public record. Area and building costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person 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, Georgia licensed professional who made a career on valuing properties in and around Chatham County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their outcome.

What does the appraisal report contain? (Back to top)

The main point of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
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.
What was entailed in the process of completing the appraisal.

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

After completing the report, how can I have assurance 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 substantial errors of omission or commission were not committed individually or collectively.

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

The final appraisal report was clear, credible and defensible.

There are rigorous classroom and on the job experience requirements that must be fulfilled in order to get an appraisal license in Georgia. Likewise, appraisers must obey a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he/she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who employs appraisers? (Back to top)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure a home 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 Lane, Clark & Company get the information used to estimate values in Chatham County or other areas? (Back to top)

Gathering data is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is received from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. 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 service.

And most importantly, the appraiser assimilates 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? (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. If you're selling your home, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Back to top)

PMI is an acronym for Private Mortgage Insurance. This supplementary plan guards the lender in the event a borrower doesn't pay on the loan and the value of the home is less 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 savings from cancelling your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than Lane, Clark & Company when it comes to analyzing real estate appreciation in Savannah and Chatham County. Contact us today.

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

We start 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 status 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. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

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

Any records on the purchase of the property for the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

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)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the report - 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.

This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate 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.

Which home renovations add the most to the price? (Back to top)

It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

As a rule, the best ROI from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.