SPERANO APPRAISALS, INC has answers to "Frequently Asked Questions"

SPERANO APPRAISALS, INC is willing to talk to you about any questions you might have about appraisals in CANANDAIGUA and Ontario County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to require your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the appraisal, what assurance is there that the value indicated is legitimate?
What does it mean for an appraiser to be licensed?
Who hires SPERANO APPRAISALS, INC
Where does SPERANO APPRAISALS, INC get the data used to estimate values in Ontario County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the 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?



What is an appraisal?   (Back to top)

The procedure of performing an appraisal deals with an estimation which leads to an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, less the age and physical deterioration, adding the land value. The Sales Comparison Approach deals with searching for similar homes in the vicinity and discovering the value based on making a comparison of those homes to the home being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Back to top)

An appraiser generates a professional, unbiased determination of market value, in the support of real property exchanges. Appraisers summarize their expert findings in appraisal reports.


What would cause me to require your services?   (Back to top)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
  • To receive a loan.
  • If you would like to reduce your property tax obligations.
  • To show a homeowner has 30% equity and remove PMI.
  • To fight inflated property taxes.
  • To deal with an estate.
  • To offer you a negotiating tool when purchasing a home.
  • To figure out the most probable property value when listing your home.
  • To protect 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 have to deal with being in a lawsuit - an appraisal will definitely help.
Click here for a more detailed explanation of the process involved in getting an appraisal.


What is the difference between an appraisal and a home inspection?   (Back to top)

Appraisers do not do perform house inspections and are not home inspectors. A third-party home inspector will investigate the structure of the house, from the top to the foundation. For the most part, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Back to top)

To be blunt, it's like comparing opera to country. The CMA relies on indistinct trends in the market. Appraisals use comparable sales which are verifiable resources. In addition, the appraisal verifies other factors like condition, location and building prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person 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, state licensed professional who made a career on valuing homes in and around Ontario County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.

What's in an appraisal report?   (Back to top)

Each report must reflect a supported estimate of value and must clearly state the following:
  • The client and other intended users.
  • The intended use of the report.
  • The appraisal's purpose.
  • The type of value reported and a definition of the value reported.
  • 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 attributes, the real property interest in question, and non-real estate items included in the valuation, 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 included in the process of completing the job.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, what assurance is there that the value indicated is legitimate?   (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was proper.

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

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

  • The final appraisal report was clear, credible and conclusive.
To become a state licensed appraiser, we must fulfill considerable education and experience requirements that train us to formulate an unbiased opinion. Plus, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Licensing and certification requires coursework, tests and real world experience. Once licensed, he/she must then engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who hires SPERANO APPRAISALS, INC   (Back to top)

Most of the time, appraisers are hired by mortgage lenders to render a value opinion on real estate involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does SPERANO APPRAISALS, INC get the data used to estimate values in Ontario County or other areas?   (Back to top)

Collecting data is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is collected 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 research tax records and other public documents that are usually online nowadays. Appraisers often need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, the appraiser assembles 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?   (Back 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. If you're selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.


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

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan takes care of the lender in case a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The money you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. SPERANO APPRAISALS, INC has years of experience with real estate value trends in CANANDAIGUA and Ontario County. Contact us today.

How do I get ready for the appraiser?   (Back to top)

We begin with an inspection of the property. 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. Inside, pick up any clutter and make sure 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:
  • Any records on the purchase of the property for the last three years.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements when the property is being appraised "as complete".

Define "Market Value"   (Back 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."



Does the appraisal belong to the bank or the consumer?   (Back 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 certainly 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.

The exception to this rule is when a home owner hires an appraiser directly. In these cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated 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?   (Back 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!

As a rule, the best ROI from renovating a home comes in the kitchen. 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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.