Hutchins Appraisal Services has answers to "Frequently Asked Questions"


Describe an appraisal
Describe what an appraiser does
What would cause me to need a real estate appraisal?
How is an appraisal different than 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?
Once the report has been delivered, how can I have confidence that the value conclusion is legitimate?
How are appraisers certified?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Erie County or other areas?
Why should I hire a licensed or certified appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?


Describe an appraisal

An appraisal is an evaluation that concludes with an unbiased opinion of value. The appraiser will typically use a number of "approaches," typically up to three, to arrive at the estimation of market value. One of the processes is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residential property, since it reflects the actions of buyers and sellers. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.


Describe what an appraiser does

An appraiser produces a fair and credible opinion of market value, in the support of real property exchanges. Appraisers reveal the details of their findings in appraisal reports.


What would cause me to need a real estate appraisal?

There are many reasons to get an appraisal from Hutchins Appraisal Services with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:

  • To get a loan.
  • To lower your property taxes.
  • To build a case for a homeowner's equity and remove insurance.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To figure out a reasonable sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you are ever involved in a lawsuit.
For a more detailed description of the appraisal process click here.


How is an appraisal different than a home inspection?

Home inspectors do not generate an opinion of value and are not appraisers. The point of a home inspection is to investigate the structure of the home from basement to rooftop. The general property inspector's report will contain an evaluation of the integrity of the house'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.


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

Frankly, they have nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use comparable sales which are valid resources. Location and architectural values are also precedent in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

Who's creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.


What can I expect to see in my appraisal report?

Every report must demonstrate a credible estimate of value and will identify the following:

  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value contained and a definition of that value.
  • The effective date of the value opinion.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, 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 considerations.
  • 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 considered when completing the assignment.


Once the report has been delivered, how can I have confidence that the value conclusion is legitimate?

In communicating an appraisal report, each appraiser must ensure the following:

  • The appraisal contained an appropriate analysis of the information.
  • Whether individually or collectively, there were no substantial errors contained in the report, nor any relevant details left out.
  • That appraisal services were done in a careful and cognizant manner.
  • The final appraisal report was easy to explain, legitimate and not easily discredited.
There are intense classroom and practical experience requirements that must be adhered to in order to get an appraisal license in Ohio. Plus, appraisers must abide by a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


How are appraisers certified?

Licensing and certification takes classroom study, tests and real world experience. Once an appraiser is licensed or certified, he or she is required to complete continuing education courses so that the license or certification doesn't expire. To see the specific requirements for any state click here.


Who employs appraisers?

Mortgage lenders are an appraiser's most likely client, requiring their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.


Where does an appraiser get the data used to estimate values in Erie County or other areas?

One of the main things an appraiser does is to compile property data. Data can be classified as either Specific or General. Specific data is collected 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 many sources. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet.

And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.

Why should I hire a licensed or certified appraiser?

An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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 home 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?

PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental policy protects the lender if a borrower doesn't pay on the loan and the market price of the home is less 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 savings from cancelling your PMI pays for the appraisal in a matter of months. Hutchins Appraisal Services is in the business of tracking real estate value trends in Erie, Huron, Ottawa and Sandusky Counties. Contact us today.

How do I get ready for the appraiser?

The first step in most appraisals is the property observation. 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 features. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

  • A survey or plot map of the property and building (if available).
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Information on "Homeowners Associations" or condominium covenants and fees.

Who has rights to the appraisal report?

For mortgage transactions, the lender requests 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 appraisal - it must come from the lender and is usually included with all the other closing documents (or before) - but is not entitled to use the report for any other purpose without permission from the lender and the appraiser.

This rule doesn't apply when a home owner engages an appraiser directly. In these situations, the appraiser will stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example.


How can I get the most ROI out of home improvements?

The added value of a particular amenity truly depends on the local market. For example, while quality appliances and decks/patios are attractive, a high-end built-in appliance or over improved deck/pation may not pay off in a neighborhood of moderately priced homes.

As a rule, the most value returned 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 on average. Bathrooms weren't far behind, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.