Absolute Equity Appraisals has answers to "Frequently Asked Questions"

Absolute Equity Appraisals is always willing to reply to any inquiries you might have about appraisals or real estate in Fort Myers and Lee County. Contact us today to learn how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would I need services from Absolute Equity Appraisals?
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's in an appraisal report?
Once the report has been delivered, how can I have confidence that the value indicated is accurate?
How are appraisers certified?
Who hires Absolute Equity Appraisals
Where does Absolute Equity Appraisals get the information used to estimate values in Lee 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 actually owns the appraisal report?
Which home renovations add the most to the price?



What is an appraisal?   (Top)

The method of creating an appraisal report consists of an evaluation which leads to an opinion of value. This opinion or estimate is concluded through a formal process that commonly uses three "common approaches to value". One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which concerns concluding a comparison to comparable houses close by. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a house. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the income produced by the building.

Describe what an appraiser does   (Top)

An appraiser offers a fair and credible assessment of market value, in the support of real property transactions. Appraisers show their analysis in appraisal reports.


Why would I need services from Absolute Equity Appraisals?   (Top)

There are a lot of reasons to purchase an appraisal from Absolute Equity Appraisals with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
  • To obtain a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To challenge high property taxes.
  • If you need to take care of an estate.
  • To offer you an edge when purchasing a home.
  • To determine a reasonable sales price when selling real estate.
  • To defend 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.
  • If you are ever involved in a civil case.
For a more detailed explanation of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (Top)

Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the available structure and appliances of a home, from the roof to the foundation. Usually, a home inspection report will evaluate the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, 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 visible structures.

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

Simply put, it's apples and oranges. The CMA utilizes market trends to generate most of their business. Appraisals use comparable sales which are valid resources. Location and building costs are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear 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. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

What's in an appraisal report?   (Top)

The main purpose 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:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The reason for the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, 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, trade fixtures and even intangible factors.
  • 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.
  • The scope of work used to complete the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been delivered, how can I have confidence that the value indicated is accurate?   (Top)

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

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

  • That appraisal services were done in a careful and conscientious manner.

  • The final appraisal report was understandable, sound and not easily discredited.
To become a state licensed appraiser, we must meet intense education and experience requirements that train us to produce an unbiased opinion. Plus, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he/she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Absolute Equity Appraisals   (Top)

Commonly, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Absolute Equity Appraisals get the information used to estimate values in Lee County or other areas?   (Top)

Collecting information is one of the primary activities of an appraiser. 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 noted by the appraiser while on site.

General data is received from a numerous sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office 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 last but not least, the appraiser assembles 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?   (Top)

If you're making any kind of financial decision and the value of your home matters, you'll want an appraisal. 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. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Absolute Equity Appraisals is the best documentation to ensure assets are split up fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI stands for Private Mortgage Insurance. This supplementary plan guards the lender in case a borrower is unable to pay on the loan and the value of the home is lower than what the borrower still owes on 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.

Is PMI a lineitem in your monthly mortgage payment?Call Absolute Equity Appraisals today at 239-454-9303 or send us an e-mail. A current appraisal could save you thousands.

How do I get ready for the appraiser?   (Top)

We start with an inspection of the property. 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. Inside, make sure it is clutter free and that we can get 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.

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 easements, such as a shared driveway with a neighbor.
  • List of personal property to be sold with the building.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

What is "Market Value?"   (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 actually owns the appraisal report?   (Top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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.

The exception to this rule is when a home owner hires an appraiser directly. In these cases, the appraiser may define 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.

Which home renovations add the most to the price?   (Top)

It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 were second, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.