Murphy Appraisal Services has answers to "Frequently Asked Questions"

Murphy Appraisal Services is always willing to handle any concerns you might have about appraisals in Covington and Saint Tammany County. Contact Murphy Appraisal Services today to learn how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
Why would someone request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Once the report is done, how can I have a guarantee that the value indicated is legitimate?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Saint Tammany 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?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (Back to top)

The appraisal process is an estimation that leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical deterioration, plus the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to similar properties close by. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a property. 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 capital produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser provides a professional, unbiased determination of market value, often in the context of a real estate purchase. Appraisers show their expert findings in appraisal reports.


Why would someone request a real estate appraisal?   (Back to top)

There are a lot of reasons to get an appraisal from Murphy Appraisal Services with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
  • To get a loan.
  • To lower your property taxes.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • To handle an estate.
  • To offer you a leg-up when purchasing real estate.
  • To determine a likely property value 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.
  • Because an official agency such as the IRS requires it.
  • If you are ever involved in a civil case.
For a more detailed description of the appraisal process click here.


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

Home inspectors do not estimate an opinion of value and do not use the same forms as appraisers. The purpose of a home inspection is to evaluate the structure of the house from bottom to rooftop. Generally, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity 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?   (Back to top)

Simply put, it's like comparing opera to country. The CMA uses market trends to generate most of their business. The appraisal relies on specific definite comparable sales. In addition, the appraisal verifies other factors like condition, location and building prices. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the agent, whose income is tied to the value of the home.

What can I expect to see in my appraisal report?   (Back to top)

Each appraisal should reflect a supported estimate of value and will identify the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
  • Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was entailed in the activity of completing the appraisal.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Once the report is done, how can I have a guarantee that the value indicated is legitimate?   (Back to top)

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

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

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

  • That a solid, supportable appraisal report was conferred.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that prepare us to formulate an unbiased opinion. Likewise, appraisers must follow a stringent industry code of ethics and respect 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).


    (Back to top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she must then complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Back to top)

Mortgage lenders are an appraiser's most likely client, needing their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Saint Tammany County or other areas?   (Back to top)

One of the most important activities of an appraiser is to collect data. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is received from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

Why do I need a professional appraisal?   (Back to top)

If you're involved in any kind 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 figure out 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. 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 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?   (Back to top)

PMI stands for Private Mortgage Insurance. PMI covers the lender in the event a borrower defaults on the loan and the value of the house is lower than the balance of 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.

Has your home value appreciated since you first purchased? Contact Murphy Appraisal Services today at (985) 626-4115. You may be able to save money by removing your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment   (Back to top)

We start with an inspection of the home. 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. On the home's interior, pick up any clutter and make sure 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.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Records on the latest purchase of the property in the last three years.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill from Saint Tammany and or legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

How does an appraiser 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."

Who has rights to the appraisal report?   (Back to top)

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 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 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 do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating?   (Back to top)

The added value of a particular amenity truly depends on the local market. 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. 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, something that may not add value would be painting just for the sake of redecorating.