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Evaluating Property in the MidSouth (EPM) has answers to "Frequently Asked Questions"

Evaluating Property in the MidSouth (EPM) is always happy to reply to any concerns you might have about appraisals or real estate in Southaven and Desoto County. Contact us today to learn how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons someone would request your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, how can I have a guarantee that the value indicated is valid?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Desoto 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?
How do I get ready for the appraiser?
What is "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   (Return to top)

The procedure of producing an appraisal deals with an estimation which leads to an opinion of value. This opinion or estimate is concluded by using a formal process that generally uses the three main "common approaches to value". One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, less the age and physical dilapidation, adding the land value. The Sales Comparison Approach deals with searching for similar homes nearby and discerning value based on comparing those homes to the property being investigated. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Return to top)

An appraiser generates an impartial and well substantiated assessment of market value, in the support of real property transactions. Appraisers reveal the details of their professional conclusions in appraisal reports.


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

There are a lot of reasons to purchase an appraisal from Evaluating Property in the MidSouth (EPM) with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
  • To obtain a loan.
  • If you would like to reduce your property tax obligations.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To contest inflated property taxes.
  • To handle an estate.
  • To give you a negotiating tool when purchasing a home.
  • To find a likely price when selling real estate.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS need an appraisal on every home.
  • If you ever find yourself in a civil case.
For a more detailed explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Return to top)

The appraiser is not a home inspector and he or she does not do a complete home inspection. The purpose of a home inspection is to investigate the structure of the house from basement to attic. Generally, a home inspection report will evaluate the amenities and the necessities of the property: 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, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Return to top)

Honestly, they have nothing in common. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be proven by public record. The appraisal report will also contain neighborhood and construction prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is the person creating the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat fee for work they perform, regardless of their outcome.

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

Each appraisal must demonstrate a believable value opinion and will identify the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value reported and a definition of that value.
  • The effective date of the appraisal.(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 factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
  • All 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.
  • The scope of work considered while working up the assignment.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the appraisal, how can I have a guarantee that the value indicated is valid?   (Return to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal contained a suitable analysis of the data.

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

  • That appraisal services were done in a careful and judicious fashion.

  • That a trustworthy, supportable appraisal report was imparted.
To become a state licensed appraiser, there are education requirements as well as practical experience that must be logged. Plus, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once licensed, he/she must then take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

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

Mortgage lenders are an appraiser's typical client, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

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

Gathering information is one of the primary occupations of an appraiser. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a variety of sources. To find out about recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents. Appraisers routinely 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 most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.


Why should I hire a licensed appraiser?   (Return 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. For those selling a home, you'll want to determine the 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. 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. 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 is the common abbreviation for for Private Mortgage Insurance. This additional plan takes care of the lender in case a borrower is unable to pay on the loan and the market price of the house is less 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 Evaluating Property in the MidSouth (EPM) today at (662) 536-6682 or send us an e-mail. A current appraisal could save you thousands.

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

The first step in most appraisals is the property inspection. 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. In the yard, 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:
  • Information on the latest purchase of the property in the last three years.
  • List of personal property to be sold with the building.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

What is "Market Value?"   (Return 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?   (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 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.

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 stated 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?   (Return to top)

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

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 were second, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.