Lowcountry Real Estate Appraisals, Inc. has answers to "Frequently Asked Questions"


	Lowcountry Real Estate Appraisals, Inc. is willing to address any concerns you might have about appraisals or real estate in Charleston County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to require a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Once the assignment is done, how can I have confidence that the value indicated is legitimate?
How difficult is it to become certified?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Charleston County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Back to top)

The method of writing an appraisal report consists of an estimation which leads to an opinion of value. The appraiser must use a several "approaches," typically three, to arrive at the estimation of market value. One of the processes is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which concerns making a comparison to similar homes nearby. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the capital produced by the property.

Describe what an appraiser does (Back to top)

An appraiser generates a fair and credible assessment of market value, in the support of real estate exchanges. Appraisers present their expert conclusions in appraisal reports.

What would cause me to require a real estate appraisal? (Back to top)

There are a lot of reasons to obtain an appraisal from Lowcountry Real Estate Appraisals, Inc. with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:

If you are applying for a loan.
To reduce your property taxes.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To challenge inflated property taxes.
To settle an estate.
To provide you an edge when purchasing a home.
To figure out 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 need an appraisal on every property.
It's possible you could be involved in a lawsuit - an appraisal will definitely help.

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

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

Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party evaluation of the livable structure and appliances of a property, from the top to the foundation. Generally, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible 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)? (Back to top)

To be blunt, it's like comparing Shakespeare to reality TV. The CMA uses market trends to generate most of their business. An appraisal is based on comparable sales that can be proven by public record. The appraisal report will also include neighborhood and building values. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person behind the report is hands down 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, write CMA's. A certified, state licensed professional who has formed a career on valuing real estate in and around Charleston County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for work they perform, regardless of their outcome.

What does the appraisal report contain? (Back to top)

Each appraisal must demonstrate a supported estimate of value and will clearly state the following:

The client and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value contained 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 description, 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 items.
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 included in the process of completing the job.

For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment is done, how can I have confidence that the value indicated is legitimate? (Back to top)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used analysis of the information.

Whether individually or collectively, there were no significant errors contained in the report, nor any material details left out.

That appraisal services were not rendered in a careless or negligent fashion.

That a trustworthy, supportable appraisal report was imparted.

To become a state licensed appraiser, there are extensive education requirements as well as experience that must be attained. In addition, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets 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. In general, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who do appraisers work for? (Back to top)

Typically, appraisers are called upon by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

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

Compiling information is one of the main things an appraiser performs. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is received from a many places. To look up recent sales to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other houses in the same market.

Why should I hire a licensed appraiser? (Back to top)

If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. When selling your home, an appraisal helps you set the most appropriate price. 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. Knowing its true value means you can make smart financial decisions.

What exactly is PMI and how can I get rid of it? (Back to top)

PMI is short for 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.


	Did you secure your mortgage with less than 20% down? Call Lowcountry Real Estate Appraisals, Inc. today at 843-577-9942. You may be able to get rid of your Private Mortgage Insurance premium.

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

We begin with an inspection of the property. During this process, the appraiser 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. On the home's interior, 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.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:

Any information on the purchase of the property for the last three years.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
Most recent real estate tax bill from Charleston and or legal description of the property.

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. 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 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 stated otherwise, the home owner can use the appraisal for any purpose.

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

It really depends on the market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

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 are right up there with kitchens, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.