Daniel J. Smith Appraisals has answers to "Frequently Asked Questions"

Daniel J. Smith Appraisals is more than happy to elaborate on any concerns you might have about appraisals in Upper Saint Clair and Allegheny County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
Why would I need your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal has been delivered, what assurance is there that the value indicated is valid?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Allegheny County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



What is an appraisal?   (Top)

The appraisal process is an evaluation that generates an opinion of value. The appraiser must use a few "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find value; it involves concluding what the improvements would cost without physical degradation, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.

What does an appraiser do?   (Top)

An appraiser forumlates a professional, unbiased determination of market value, in the support of real property exchanges. Appraisers show their expert investigation in appraisal reports.


Why would I need your services?   (Top)

There are many reasons to obtain an appraisal from Daniel J. Smith Appraisals with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • If you would like to lower your property tax obligations.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To fight inflated property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To figure out the most probable price when listing your home.
  • To defend 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.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
If you need more information regarding the appraisal process, please click here.


How is an appraiser different than a home inspector?   (Top)

Appraisers do not do provide home inspections and are not home inspectors. A third-party home inspector will investigate the structure of the property, from the top to the bottom. The usual home inspector's report will include an evaluation of the condition of the house's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

To be blunt, it's apples and oranges. The CMA depends on indefinite market trends. Appraisals use similar sales which are valid resources. The appraisal report will also include neighborhood and building costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who made a career on valuing properties in and around Allegheny County creates the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.

What are the contents of an appraisal report?   (Top)

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see 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 reported and a definition of the value reported.
  • 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 factors, the real property interest in question, 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 look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been delivered, what assurance is there that the value indicated is valid?   (Top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal used a suitable analysis of the data.

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

  • That appraisal services were not carried out in a careless or negligent fashion.

  • The final appraisal report was clear, credible and not easily discredited.
There are intense classroom and practical experience requirements that must be satisfied in order to get an appraisal license in Pennsylvania. Plus, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and real world experience. Once licensed, he or she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (Top)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Allegheny County or other areas?   (Top)

One of the most important tasks an appraiser engages in is to gather property data. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a numerous places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood system.

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


Why do I need a professional appraisal?   (Top)

An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. If you're 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. For parties settling an estate or divorce, an appraisal from Daniel J. Smith Appraisals is the best documentation to ensure assets are divided properly. 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?   (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy protects the lender if a borrower doesn't pay on the loan and the value of the house is less 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 money you keep from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Daniel J. Smith Appraisals stays current with value trends in Upper Saint Clair and Allegheny County. Contact us today.

Should I do anything in advance of the appraisal inspection   (Top)

The first step in most appraisals is the home inspection. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure we can get to items 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:
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • List of personal property to be sold with the building.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

How does an appraiser define "Market Value"?   (Top)

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."



Does the appraisal belong to the bank or the consumer?   (Top)

For mortgage transactions, the lender requests 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 report - it's usually included 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 engages an appraiser directly. In these situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.


Which home renovations add the most to the price?   (Top)

It really depends on the market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.