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McSpadden Real Estate Services, Inc. has answers to "Frequently Asked Questions"

McSpadden Real Estate Services, Inc. is always eager to handle any concerns you might have about appraisals or real estate in Knox County. Contact us today to see how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
Why would I request your services?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the report has been completed, how can I have certainty that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who hires an appraiser?
Where does an appraiser get the data used to estimate values in Knox 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?
Does the appraiser need anything from me in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (List of questions)

The appraisal process is an evaluation that produces an opinion of value. This opinion or estimate is arrived at using a formal method that commonly utilizes three "common approaches to value". The Cost Approach is one of the methods that appraisers use to find value; it involves finding what the improvements would cost without physical degradation, plus the land value. The Sales Comparison Approach deals with finding similar houses nearby and discerning value based on making a comparison of those homes to the property being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of value for a house. 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.

Describe what an appraiser does   (List of questions)

An appraiser forumlates a professional, unbiased determination of market value, in the support of real estate exchanges. Appraisers present their professional analysis in appraisal reports.


Why would I request your services?   (List of questions)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • To obtain a loan.
  • If you would like to lower your property tax obligations.
  • To build a case for a homeowner's equity and remove insurance.
  • To fight improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing real estate.
  • To figure out a likely price when listing your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
For a more extensive explanation of the appraisal process click here.


How is an appraisal different than a home inspection?   (List of questions)

Appraisers do not do provide residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the available structure and mechanical systems of a property, from the top to the bottom. Commonly, a home inspection report will explain the amenities and the requirements 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, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (List of questions)

Frankly, it's apples and oranges. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be verified by records. In addition, the appraisal looks at other factors like condition, location and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is actually the most significant difference between a CMA and an appraisal. A CMA is written 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, Tennessee licensed professional who made a career on valuing homes in and around Knox County creates the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.

What are the contents of an appraisal report?   (List of questions)

Every appraisal should indicate a believable estimate of value and must identify the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the assignment.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property attributes, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed 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 included in the process of completing the appraisal.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report


Once the report has been completed, how can I have certainty that the final number is trustworthy?   (List of questions)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was appropriate.

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

  • That appraisal services were provided in a careful and cognizant manner.

  • The final appraisal report was understandable, legitimate and not easily discredited.
To become a state licensed appraiser, there are education requirements as well as on the jobexperience that must be logged. Plus, appraisers must follow a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisor. Once licensed, he/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 hires an appraiser?   (List of questions)

Most of the time, appraisers are employed by mortgage lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

Collecting data is one of the primary functions of an appraiser. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers routinely have 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 service.

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


Why do I need a professional appraisal?   (List of questions)

An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. For those selling a home, you'll want to determine a 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. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from McSpadden Real Estate Services, Inc. is the best way to ensure assets are divided evenly. 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?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. This added policy guards the lender if a borrower defaults on the loan and the market price of the home is lower than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

Is PMI something increasing your monthly mortgage payment?Call McSpadden Real Estate Services, Inc. today at (865) 524-5348 or send us an e-mail. A current appraisal could save you thousands.

Does the appraiser need anything from me in advance?   (List of questions)

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 status of its amenities. Inside, 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.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • A survey or plot map of the property and building (if readily available).
  • Title policy that lists encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • 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"?   (List of questions)

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?   (List of questions)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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.

It's different when it's the homeowner engaging 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 use the appraisal for any purpose.


I want to get more for my house. Where should I spend money renovating?   (List of questions)

It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.