RL Carmichael & Assoc, Inc. has answers to "Frequently Asked Questions"

RL Carmichael & Assoc, Inc. is always ready to answer any concerns you might have about appraisals in Chesapeake and Chesapeake City County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
After completing the appraisal, what guarantee is there that the final number is trustworthy?
How are appraisers certified?
Who hires RL Carmichael & Assoc, Inc.
Where does an appraiser get the information used to estimate values in Chesapeake City County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Go to list of  questions)

An appraisal report is an investigation allowing the appraiser to come to an opinion of value. This opinion or estimate is figured using a formal method that usually utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the property, minus age and physical dilapidation, plus the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. 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 capital produced by the property.

What does an appraiser do?   (Go to list of  questions)

An appraiser forumlates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers present their conclusions in appraisal reports.


What would cause me to request a real estate appraisal?   (Go to list of  questions)

There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:
  • To get a loan.
  • If you would like to reduce your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To fight high property taxes.
  • To deal with an estate.
  • To give you an edge when purchasing real estate.
  • To figure out a likely property value when putting your home on the market.
  • 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 require an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
If you need more information about the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (Go to list of  questions)

Home inspectors do not figure out an opinion of value and do not do appraisal reports. A third-party home inspector will inspect the structure of the home, from the top to the foundation. Generally, a home inspection report will evaluate the amenities and the requirements of the home: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Simply put, it's like comparing broadband and dial-up. The CMA uses market trends to create most of their business. The appraisal is reliant on specific valid comparable sales. In addition, the appraisal verifies other factors like condition, area and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's behind the report is frankly 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. A certified, Virginia licensed professional who has formed their livelihood on valuing real estate in and around Chesapeake City County creates the appraisal. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the agent, whose income is tied to the value of the home.

What can I expect to see in my appraisal report?   (Go to list of  questions)

The main objective of an appraisal report is to let the reader know the value of the real estate in question, 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 appraisal.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 entailed in the activity of completing the job.
For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what guarantee is there that the final number is trustworthy?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • That the information analysis contained in the appraisal was appropriate.

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

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

  • The final appraisal report was transparent, legitimate and conclusive.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that enable us to produce an unbiased opinion. In addition, appraisers must abide by a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to list of  questions) Licensing and certification takes coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he or she must then take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who hires RL Carmichael & Assoc, Inc.   (Go to list of  questions)

Typically, appraisers are employed by mortgage lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Chesapeake City County or other areas?   (Go to list of  questions)

One of the most important things an appraiser does is to collect property data. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is collected from a numerous places. To find out about recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

Why should I hire a licensed appraiser?   (Go to list of  questions)

An appraisal is a valuable tool whenever your home's value is relevant to a financial decision. When selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI stands for Private Mortgage Insurance. This additional plan protects the lender in case a borrower defaults on the loan and the value of the property is lower than what the borrower still owes on 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 getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than RL Carmichael & Assoc, Inc. when it comes to analyzing real estate appreciation in Chesapeake and Chesapeake City County. Contact us today.

Does the appraiser need anything from the homeowner in advance?   (Go to 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 condition of its amenities. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • 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 enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

What is "Market Value?"   (Go to 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."

Who has rights to the appraisal report?   (Go to list of  questions)

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 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 engages an appraiser directly. In these scenarios, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (Go to list of  questions)

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. 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, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.