Arrowhead Appraisals, LLC has answers to "Frequently Asked Questions"

Arrowhead Appraisals, LLC is eager to talk to you about any inquiries you might have about appraisals in Waukesha County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons someone would request your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the appraisal is done, what guarantee is there that the final number is accurate?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does Arrowhead Appraisals, LLC get the data used to estimate values in Waukesha County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal"   (See list of FAQ's)

The method of performing an appraisal consists of an investigation which leads to an opinion of value. The appraiser will use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find the value of a house; it involves finding what the improvements would cost without physical degradation, adding the land value. The Sales Comparison Approach deals with searching for similar houses in close proximity and figuring out the value based on comparing those homes to the house in question. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do?   (See list of FAQ's)

An appraiser generates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers show their expert conclusions in appraisal reports.

What are the reasons someone would request your services?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • To obtain a loan.
  • To lower your tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To contest high property taxes.
  • To settle an estate.
  • To give you an edge when purchasing a home.
  • To figure out an honest price when putting your home on the market.
  • 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 home.
  • If you are ever involved in a lawsuit.
If you need more information about the appraisal process, please click here.

How is an appraiser different than a home inspector?   (See list of FAQ's)

Appraisers do not do provide house inspections and are not home inspectors. A third-party home inspector will judge the structure of the home, from the roof to the foundation. Commonly, a home inspection report will evaluate the amenities and the requirements of the property: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (See list of FAQ's)

Frankly, it's like comparing opera to country. The CMA uses market trends to create most of their business. An appraisal relies on comparable sales that can be proven by records. Area and architectural costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's creating the report is frankly the biggest 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. A certified, Wisconsin licensed professional who has formed a career on valuing homes in and around Waukesha County creates the appraisal. Moreover, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.

What can I expect to see in my appraisal report?   (See list of FAQ's)

Each report should demonstrate a credible estimate of value and should document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The reason for the assignment.
  • The type of value contained and a definition of that value.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
  • 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.
  • The scope of work used while working up the appraisal.
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal is done, what guarantee is there that the final number is accurate?   (See list of FAQ's)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal used an apropos analysis of the information.

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

  • That appraisal services were provided in a careful and judicious fashion.

  • The final appraisal report was transparent, sound and not easily discredited.
There are rigorous classroom and experience requirements that must be satisfied in order to get an appraisal license in Wisconsin. Likewise, appraisers must obey a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (See list of FAQ's) Licensing and certification requires classroom study, tests and practical experience. Once an appraiser is licensed, he or she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (See list of FAQ's)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Arrowhead Appraisals, LLC get the data used to estimate values in Waukesha County or other areas?   (See list of FAQ's)

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

General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

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

What can a full appraisal do for me?   (See list of FAQ's)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine 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. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. This added policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the home 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.

Does your monthly loan payment include a fee for PMI?Call Arrowhead Appraisals, LLC today at 262-372-4599 or send us an e-mail. Documentation of your home's present value could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (See list of FAQ's)

The first step in most appraisals is the home inspection. 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 access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Any records on the purchase of the property for the last three years.
  • List of personal property to be sold with the home.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

Define "Market Value"   (See list of FAQ's)

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?   (See list of FAQ's)

For mortgage transactions, the lender orders 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 entitled 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 situations, the appraiser may state 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?   (See list of FAQ's)

This really depends on where the home is. 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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.