Pinnacle Appraisal Group has answers to "Frequently Asked Questions"


	Pinnacle Appraisal Group is always prepared to answer any concerns you might have about appraisals or real estate in Kings Park and Suffolk County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would I require a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Upon completion of the appraisal, how can I have assurance that the final number is veritable?
What does it mean for an appraiser to be licensed?
Who are an appraiser's customers?
Where does Pinnacle Appraisal Group get the data used to estimate values in Suffolk County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (See list of FAQ's)

An appraisal report is an estimation allowing the appraiser to come to an opinion of value. This opinion or estimate is figured by using a formal method that usually 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 home, less the age and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

What does an appraiser do? (See list of FAQ's)

An appraiser produces a professional, unbiased opinion of market value, often in the context of a real estate exchange. Appraisers document their analysis in appraisal reports.

Why would I require a real estate appraisal? (See list of FAQ's)

There are a lot of reasons to get an appraisal from Pinnacle Appraisal Group with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:

If you are applying for a loan.
To reduce your property taxes.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To contest improperly assessed property taxes.
To handle an estate.
To give you an edge when purchasing real estate.
To determine a reasonable sales price when listing your home.
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.
It's possible you could have to deal with being in a lawsuit - an appraisal will help.

For a more detailed description of the appraisal process click here.

How is an appraiser different than a home inspector? (See list of FAQ's)

The appraiser is not a home inspector and he or she does not do a full home inspection. The point of a home inspection is to evaluate the structure of the home from bottom to rooftop. Commonly, a home inspection report will evaluate the amenities and the requirements of the house: 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.

My agent performed a CMA for me. Is that the same as an appraisal? (See list of FAQ's)

Simply put, it's apples and oranges. What the CMA relies upon are ill-defined trends. The appraisal depends on similar valid comparable sales. Also, the appraisal looks at other factors like condition, neighborhood and building prices. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who bases their livelihood on valuing properties in and around Suffolk 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 collect only a previously agreed upon sum for work they perform, regardless of their outcome.

What does the appraisal report contain? (See list of FAQ's)

Every report must demonstrate a credible value opinion and will document the following:

The client and whose purposes the appraisal is to serve.
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 attributes, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
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 involved in the process of completing the appraisal.

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

Upon completion of the appraisal, how can I have assurance that the final number is veritable? (See list of FAQ's)

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

The appraisal used an appropriate analysis of the information.

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

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

The final appraisal report was transparent, sound and not easily discredited.

There are intense classroom and experience requirements that must be fulfilled in order to become a licensed appraiser in New York. Likewise, appraisers must abide by a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(See list of FAQ's) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/she must then complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who are an appraiser's customers? (See list of FAQ's)

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

Where does Pinnacle Appraisal Group get the data used to estimate values in Suffolk County or other areas? (See list of FAQ's)

Compiling data is one of the primary functions of an appraiser. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To double-check actual sales prices, we research items in the assessor's office and other public documents. Appraisers often have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.

Why do I need a professional appraisal? (See list of FAQ's)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're 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. Simply put, a home 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? (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental plan guards the lender if a borrower defaults on the loan and the market price of the property is less than what the borrower still owes on 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.


	The savings from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Pinnacle Appraisal Group stays current with value trends in Kings Park and Suffolk County. Contact us today.

How do I get ready for the appraiser? (See list of FAQ's)

The first step in most appraisals is the home 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. 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 landscaping and move any items that would make it difficult to measure the structure. Indoors, make sure we can get to appliances 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 survey or plot map of the property and building (if available).
List of personal property to be sold with the home.
Most recent real estate tax bill from Suffolk 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).
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

How does an appraiser define "Market Value"? (See list of FAQ's)

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? (See list of FAQ's)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the report - 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 hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements? (See list of FAQ's)

It really depends on the market. 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.

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, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.