W.R. Flowers and Associates has answers to "Frequently Asked Questions"

W.R. Flowers and Associates is always eager to elaborate on any concerns you might have about appraisals or real estate in Paris and Henry County. Contact us today to talk about how we can help you with your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to require 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's in an appraisal report?
Once the report is done, how can I have confidence that the final number is valid?
How difficult is it to become certified?
Who are an appraiser's customers?
Where does W.R. Flowers and Associates get the information used to estimate values in Henry County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



Define the term "Appraisal"   (Top)

An appraiser performs an evaluation that leads to an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the approaches that appraisers use to find value; it involves finding what the improvements would cost without physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which involves making a comparable analysis to other similar nearby properties which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to figure the value of a property based on what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Top)

An appraiser generates an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers reveal the details of their investigation in appraisal reports.


What would cause me to require a real estate appraisal?   (Top)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an report include:
  • To obtain a loan.
  • If you would like to lower your property tax obligations.
  • To show a homeowner has 30% equity and remove insurance.
  • To contest inflated property taxes.
  • To handle an estate.
  • To provide you a leg-up when purchasing real estate.
  • To find a reasonable price when selling real estate.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
If you need more information about the appraisal process, please click here.


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

Appraisers do not do provide house inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. Usually, a home inspection report will explain 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Simply put, it's apples and oranges. The CMA uses market trends to create most of their business. Appraisals use similar sales which are verifiable resources. Also, the appraisal checks other factors like condition, area and building costs. 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.

But the most significant factor is who's doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, Tennessee licensed professional who made their livelihood on valuing real estate in and around Henry County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their outcome.

What's in an appraisal report?   (Top)

Each appraisal must indicate a believable estimate of value and should document the following:
  • Who engaged the appraiser and other intended users.
  • 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.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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.
  • What was involved in the activity of completing the assignment.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the report is done, how can I have confidence that the final number is valid?   (Top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • That the information analysis contained in the appraisal was proper.

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

  • That appraisal services were rendered in a careful and judicious manner.

  • The final appraisal report was understandable, legitimate and not easily discredited.
To become a state licensed appraiser, we must meet intense education and experience requirements that prepare us to formulate an unbiased opinion. Likewise, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Licensing and certification is achieved through classroom study, tests and experience working under a supervisory appraiser. Once licensed, he/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 are an appraiser's customers?   (Top)

Commonly, appraisers are called upon by lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does W.R. Flowers and Associates get the information used to estimate values in Henry County or other areas?   (Top)

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

General data is gathered from a numerous places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we look at tax records and other public documents. Appraisers often have 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 assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.


Why do I need a professional appraisal?   (Top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want an appraisal. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house 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?   (Top)

PMI is an acronym for Private Mortgage Insurance. PMI guards the lender in case a borrower doesn't pay on the loan and the market price of the property 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 amount you keep from cancelling your PMI pays for the appraisal in a matter of months. Nobody is more qualified than W.R. Flowers and Associates when it comes to analyzing real estate appreciation in Paris and Henry County. Contact us today.

How do I get ready for the appraiser?   (Top)

We start with an inspection of the property. During this process, the appraiser 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, 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 any written private agreements, such as a shared driveway with a neighbor.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • 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"?   (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."



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

In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled 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 stipulate 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.


How can I get the most ROI out of home improvements?   (Top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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 investment. 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, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.