McMillin Real Estate & Appraisal, Inc. has answers to "Frequently Asked Questions"


	McMillin Real Estate & Appraisal, Inc. is always willing to answer any concerns you might have about appraisals or real estate in Warren County. Contact McMillin Real Estate & Appraisal, Inc. today to learn how we can help solve your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to need your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Once the appraisal has been completed, what guarantee is there that the final number is valid?
What does it mean for an appraiser to be licensed?
Who are an appraiser's customers?
Where does McMillin Real Estate & Appraisal, Inc. get the information used to estimate values in Warren 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"?
Who actually owns the appraisal report?
Which home renovations add the most to the price?

What is an appraisal? (Return to top)

The appraisal process is an estimation that generates an opinion of value. This opinion or estimate is concluded using a formal method that typically uses three "common approaches to value". One of the processes is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. Another of the methods is the Sales Comparison Approach - which deals with finding a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of value for a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.

What does an appraiser do? (Return to top)

An appraiser provides a professional, unbiased opinion of market value, in the support of real estate exchanges. Appraisers exhibit their findings in appraisal reports.

What would cause me to need your services? (Return to top)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an report include:

If you are applying for a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
To challenge inflated property taxes.
To deal with an estate.
To give you a negotiating tool when purchasing a home.
To figure out an honest property value when putting your home on the market.
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.

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

How is an appraiser different than a home inspector? (Return to top)

Appraisers do not do complete house inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and mechanical systems of a house, from the roof to the bottom. The general property inspector's report will contain an evaluation of the integrity of the property'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.

My agent performed a CMA for me. Is that the same as an appraisal? (Return to top)

Simply put, it's night and day. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be validated by records. Area and construction values are also a priority in an appraisal. All a CMA does is generate a "ball park 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 frankly the most significant difference between a CMA and an appraisal. 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 produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

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

The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:

The client and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Pertinent property attributes, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
All 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.
What was entailed in the activity of completing the appraisal.

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

Once the appraisal has been completed, what guarantee is there that the final number is valid? (Return to top)

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

The appraisal used an apropos analysis of the data.

Whether individually or collectively, there were no crucial errors contained in the report, nor any relevant details left out.

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

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

There are rigorous education and real world experience requirements that must be met in order to achieve the status of "licensed appraiser" in Mississippi. Plus, appraisers must stick to a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting 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 vary from state to state. However, licensing and certification typically translates to many hours of coursework, tests and real world experience. Once licensed, he/she is required to engage in continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Return to top)

Mortgage lenders are an appraiser's typical customer, requesting their services to ensure real estate 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 McMillin Real Estate & Appraisal, Inc. get the information used to estimate values in Warren County or other areas? (Return to top)

One of the most important things an appraiser does is to collect property data. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is collected from a many sources. To look up recent sales to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.

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

Why do I need a professional appraisal? (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. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. It covers the lender in the event a borrower defaults on the loan and the value of the property is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Is PMI a part of your monthly mortgage payment?Call McMillin Real Estate & Appraisal, Inc. today at 6016368193 or send us an e-mail. A current 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 home. 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 find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Information on the latest purchase of the property in the last three years.
List of personal property to be sold with the home.
Title policy that describes encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser define "Market Value"? (Return 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."

Who actually owns the appraisal report? (Return to top)

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 entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

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

This really depends on where the home is. 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 investment. 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%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.