profile picture

Oakley Residential Appraisals has answers to "Frequently Asked Questions"

Oakley Residential Appraisals is prepared to handle any concerns you might have about appraisals in Springfield and Hampden County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would request your services?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the assignment has been delivered, how can I have certainty that the final number is valid?
How hard is it to become certified?
Who engages the services of appraisers?
Where does Oakley Residential Appraisals get the data used to estimate values in Hampden County or other areas?
Why should I hire a licensed appraiser?
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"?
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?



What is an appraisal?   (Return to top)

An appraiser performs an estimation that leads to an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to draw up the estimation of market value. One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves finding similar homes in the vicinity and discerning value based on comparing those houses to the property being appraised. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a home. 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 money generated by the property.

Describe what an appraiser does   (Return to top)

An appraiser offers an unbiased and well supported determination of market value, often in the context of a real estate sale. Appraisers document their professional conclusions in appraisal reports.


What are the reasons someone would request your services?   (Return to top)

There are a lot of reasons to get an appraisal from Oakley Residential Appraisals with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To fight inflated property taxes.
  • To settle an estate.
  • To give you a negotiating tool when purchasing real estate.
  • To determine an honest sales price when listing your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS require an appraisal on every home.
  • If you are ever involved in a lawsuit.
For a more extensive explanation of the appraisal process click here.


How is an appraisal different than a home inspection?   (Return to top)

Appraisers do not do provide residential property inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the house from bottom to attic. Commonly, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (Return to top)

Simply put, it's apples and oranges. The CMA utilizes market trends to create most of their business. An appraisal relies on comparable sales that can be validated by records. The appraisal report will also contain neighborhood and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's doing the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the value of the home.

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

The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • 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 appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible items.
  • 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 while working up the job.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment has been delivered, how can I have certainty that the final number is valid?   (Return to top)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was suitable.

  • Whether individually or collectively, there were no substantial errors contained in the appraisal, nor any relevant details left out.

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

  • The final appraisal report was clear, credible and not easily discredited.
There are intense education and experience requirements that must be adhered to in order to achieve the designation of "licensed appraiser" in Massachusetts. Likewise, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisor. Once licensed, he or she is required to take continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Return to top)

Mortgage lenders are an appraiser's most likely client, 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 asset division and estate settlements.

Where does Oakley Residential Appraisals get the data used to estimate values in Hampden County or other areas?   (Return to top)

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

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) have 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. Appraisers routinely need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.


Why should I hire a licensed appraiser?   (Return 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. When selling your home, an appraisal will help you determine the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Oakley Residential Appraisals is the best way to ensure assets are divided fairly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.


What exactly is PMI and how can I get rid of it?   (Return to top)

PMI stands for Private Mortgage Insurance. This added policy protects the lender in case a borrower is unable to pay on the loan and the value of the property 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.

Is PMI a part of your monthly house payment?Call Oakley Residential Appraisals today at 413-788-7880 or send us an e-mail. A new appraisal could save you thousands.

Should I do anything in advance of the appraisal inspection   (Return to top)

We begin with an inspection of the property. During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes 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.

To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
  • A plot plan or survey of the house and land (if available).
  • List of personal property to be sold with the building.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • 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"?   (Return to 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."



Once complete, who actually owns the appraisal report?   (Return to top)

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 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 define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.


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

The added value of a particular amenity truly depends on the local 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.

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 boost 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.