Distinctive Residential Appraisals, Inc. has answers to "Frequently Asked Questions"


	Distinctive Residential Appraisals, Inc. is eager to talk to you about any questions you might have about appraisals or real estate in Skokie and Cook County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would need a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, what guarantee is there that the final number is accurate?
What are the requirements to be a certified appraiser?
Who hires Distinctive Residential Appraisals, Inc.
Where does an appraiser get the data used to estimate values in Cook 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 appointment
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

What is an appraisal? (Go to list of questions)

An appraisal is a thought process leading to an opinion of value. The appraiser will typically use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves concluding what the improvements would cost minus physical depreciation, adding the land value. The Sales Comparison Approach involves finding similar properties in close proximity and discerning value based on comparing those houses to the property in question. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the value of a property based on what an investor would pay based on the income produced by the building.

Describe what an appraiser does (Go to list of questions)

An appraiser offers an impartial and well substantiated opinion of market value, in the support of real property transactions. Appraisers document their professional analysis in appraisal reports.

What are the reasons someone would need a real estate appraisal? (Go to list of questions)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:

To obtain a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove PMI.
To fight high property taxes.
To deal with an estate.
To give you a negotiating tool when purchasing a home.
To determine a likely price when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every home.
If you ever find yourself in a civil case.

Click here for a more extensive explanation of the process dealing with getting an appraisal.

How is an appraiser different than a home inspector? (Go to list of questions)

Home inspectors do not figure out an opinion of value and are not appraisers. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a home, from the roof to the bottom. The usual home inspector's report will contain an evaluation of the integrity of the property's heating system, 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.

My agent performed a CMA for me. Is that the same as an appraisal? (Go to list of questions)

Frankly, they have nothing in common. The CMA depends on indefinite local market trends. The appraisal relies on similar verifiable comparable sales. Location and construction prices are also precedent 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.

Who's creating the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who bases a career on valuing properties in and around Cook County is behind the appraisal. Further, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

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

The main purpose of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work used to complete the job.

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

Upon completion of the appraisal, what guarantee is there that the final number is accurate? (Go to list of questions)

In communicating an appraisal report, each appraiser must make sure of the following:

That the information analysis contained in the appraisal was suitable.

Whether individually or collectively, there were no critical errors contained in the appraisal, nor any material details left out.

That appraisal services were rendered in a careful and cognizant manner.

The final appraisal report was easy to explain, sound and not easily discredited.

There are rigorous education and experience requirements that must be satisfied in order to get an appraisal license in Illinois. Likewise, appraisers must follow a meticulous industry code of ethics and comply with 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).

(Go to list of questions) Licensing and certification requires coursework, tests and real world experience. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Distinctive Residential Appraisals, Inc. (Go to list of questions)

Mortgage lenders are an appraiser's typical customer, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

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

One of the main activities of an appraiser is to compile property data. Data can be categorized as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is gathered from a many sources. To research recent sales to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.

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

Why should I hire a licensed appraiser? (Go to list of questions)

If you're making any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from Distinctive Residential Appraisals, Inc. is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.

What exactly is PMI and how can I get rid of it? (Go to list of questions)

PMI is an acronym for Private Mortgage Insurance. This supplementary policy protects the lender in the event a borrower defaults on the loan and the value of the house is less than the loan balance. 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.


	Did you secure your mortgage with less than 20% down? Contact Distinctive Residential Appraisals, Inc. today at 847-673-1100. You may be able to cancel your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal appointment (Go to list of questions)

We start 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. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

Any information on the purchase of the property for the last three years.
Written property agreements, such as a maintenance agreement for a shared driveway.
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

How does an appraiser define "Market Value"? (Go to 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 has rights to the appraisal report? (Go to list of questions)

In most real estate transactions, the appraisal is ordered by the lender. 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'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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may state the purpose of the appraisal; 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.

Are some home improvements more worthwhile than others? (Go to list of questions)

It really depends on the market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.