Colliver Appraisal Service has answers to "Frequently Asked Questions"

Colliver Appraisal Service is prepared to answer any concerns you might have about appraisals in Fayette County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to need services from Colliver Appraisal Service?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the appraisal has been completed, what guarantee is there that the value conclusion is legitimate?
How difficult is it to become certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Fayette County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



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

An appraisal report is a thought process that concludes with an opinion of value. The appraiser must use a few "approaches," typically three, to arrive at the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, minus age and physical deterioration, adding the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which deals with concluding a comparison to similar homes close by. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residence. 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 produced by the property.

Describe what an appraiser does   (See list of FAQ's)

An appraiser produces an impartial and well substantiated determination of market value, often in the context of a real estate exchange. Appraisers show their expert conclusions in appraisal reports.


What would cause me to need services from Colliver Appraisal Service?   (See list of FAQ's)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
  • To obtain a loan.
  • To lower your tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To provide you an edge when purchasing real estate.
  • To find the most probable property value when selling real estate.
  • 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 need an appraisal on every house.
  • If you are ever involved in a civil case.
For a more extensive explanation of the appraisal process click here.


Is an appraisal the same as a home inspection?   (See list of FAQ's)

Appraisers do not do complete house inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the property from foundation to rooftop. The general house inspector's report will include 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 accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

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

To be blunt, it's like comparing sugar and saccharin. The CMA utilizes market trends to conduct most of their business. An appraisal utilizes comparable sales that can be validated by records. In addition, the appraisal checks other factors like condition, area and replacement costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. 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 collect only a previously agreed upon sum for assignments, regardless of their outcome.

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

The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the assignment.
  • 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 attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, 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.
  • What was entailed in the process of completing the appraisal.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, what guarantee is there that the value conclusion is legitimate?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal used an appropriate analysis of the data.

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

  • That appraisal services were not rendered in a careless or negligent manner.

  • That a credible, supportable appraisal report was conferred.
There are rigorous education and experience requirements that must be fulfilled in order to achieve the designation of "licensed appraiser" in Kentucky. In addition, appraisers must stick to a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (See list of FAQ's) Licensing and certification is achieved through coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he or 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 do appraisers work for?   (See list of FAQ's)

Commonly, appraisers are called upon by mortgage lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Fayette County or other areas?   (See list of FAQ's)

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

General data is collected from a number of places. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.

How can a licensed appraiser help me?   (See list of FAQ's)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal helps you set the most appropriate price. 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. Knowing its true value means you can make the right financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan takes care of the lender in case a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The savings from dropping your PMI pays for the appraisal in no time. Nobody is more qualified than Colliver Appraisal Service when it comes to analyzing real estate appreciation in Lexington and Fayette County. Contact us today.

Should I do anything in advance of the appraisal inspection   (See list of FAQ's)

The first step in most appraisals is the home inspection. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its features. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.

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 easements, such as a shared driveway with a neighbor.
  • 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.
  • Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

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

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."

Once complete, who actually owns the appraisal report?   (See list of FAQ's)

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 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.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. 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 noted otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others?   (See list of FAQ's)

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.

As a rule, the most value returned from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.