Hancock Appraisal Services, Inc. has answers to "Frequently Asked Questions"


	Hancock Appraisal Services, Inc. is always ready to talk to you about any questions you might have about appraisals or real estate in Valparaiso and Porter County. Contact Hancock Appraisal Services, Inc. today to learn how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
What are the reasons someone would request your services?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the assignment has been completed, what assurance is there that the final number is accurate?
What goes into an appraiser's certification?
Who hires Hancock Appraisal Services, Inc.
Where does Hancock Appraisal Services, Inc. get the data used to estimate values in Porter 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?
Do you need anything from me in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

What is an appraisal? (Return to top)

An appraiser provides an evaluation that generates an opinion of value. This opinion or estimate is figured by a formal process that usually uses three "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves finding what the improvements would cost without physical deterioration, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar nearby properties which have recently sold. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a property. One of the least common approaches in appraising houses is the Income Approach, which is generally used to figure the market value of a property based on what an investor would pay based on the capital produced by the building.

Describe what an appraiser does (Return to top)

An appraiser provides an unprejudiced and well substantiated assessment of market value, often in the context of a real estate sale. Appraisers document their findings in appraisal reports.

What are the reasons someone would request your services? (Return to top)

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:

To obtain a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove PMI.
To fight inflated property taxes.
If you need to settle an estate.
To give you a leg-up when purchasing real estate.
To find an honest sales price when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every property.
If you ever find yourself in a lawsuit.

Click here for a more detailed explanation of the process involved in getting an appraisal.

Is an appraisal the same as a home inspection? (Return to top)

Appraisers do not do provide residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a home, from the top to the foundation. Generally, a home inspection report will evaluate the amenities and the necessities of the house: 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 other visible structures.

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

To be blunt, it's like comparing broadband and dial-up. The CMA utilizes market trends to create most of their business. Appraisals use similar sales which are verifiable resources. The appraisal report will also contain neighborhood and building prices. 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 who's behind the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who made a career on valuing properties in and around Porter County creates the appraisal. 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 flat sum for assignments, regardless of their value conclusion.

What are the contents of an appraisal report? (Return to top)

The main objective of an appraisal document is to give 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 appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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 process of completing the assignment.

For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, what assurance is there that the final number is accurate? (Return to top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:

That the information analysis utilized in the appraisal was appropriate.

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

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

That a credible, substantiated appraisal report was communicated.

To become a state licensed appraiser, there are education requirements as well as experience that must be logged. Plus, appraisers must stick to a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification takes classroom study, tests and practical experience. Once an appraiser is licensed, he/she is required to engage in continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who hires Hancock Appraisal Services, Inc. (Return to top)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does Hancock Appraisal Services, Inc. get the data used to estimate values in Porter County or other areas? (Return to top)

One of the most important activities of an appraiser is to collect property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a numerous places. To research recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Appraisers often have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, 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? (Return to top)

An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from Hancock Appraisal Services, Inc. is the best way to ensure assets are split up evenly. Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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

PMI stands for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the value of the home 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.


	The savings from cancelling your PMI pays for the appraisal in a matter of months. Nobody is more qualified than Hancock Appraisal Services, Inc. when it comes to analyzing real estate appreciation in Valparaiso and Porter County. Contact us today.

Do you need anything from me in advance? (Return to top)

We begin with an inspection of the home. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to items 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:

A plot plan or survey of the house and land (if available).
List of personal property to be sold with the building.
Most recent real estate tax bill and or legal description of the property.
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

Define "Market Value" (Return to top)

In real estate appraising, 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? (Return 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 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 state the purpose of the appraisal; 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.

Are some home improvements more worthwhile than others? (Return to top)

It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.