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O'Neil Appraisal, LLC has answers to "Frequently Asked Questions"

O'Neil Appraisal, LLC is prepared to address any concerns you might have about appraisals or real estate in Clarkston and Oakland County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would someone need services from O'Neil Appraisal, LLC?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
After completing the appraisal, what guarantee is there that the final number is accurate?
What are the requirements to be a certified appraiser?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Oakland County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (Go to list of  questions)

The appraisal process is an evaluation that produces an opinion of value. This opinion or estimate is concluded by a formal method that typically utilizes three "common approaches to value". The Cost Approach is one of the methods that real estate appraisers use to find value; it involves finding what the improvements would cost minus physical depreciation, plus the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which deals with figuring a comparison to comparable homes close by. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. One of the least common approaches in appraising homes is the Income Approach, which is mainly 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?   (Go to list of  questions)

An appraiser provides a fair and credible opinion of market value, often in the context of a real estate sale. Appraisers show their expert analysis in appraisal reports.


Why would someone need services from O'Neil Appraisal, LLC?   (Go to list of  questions)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax obligations.
  • To build a case for a homeowner's equity and remove PMI.
  • To challenge high property taxes.
  • To handle an estate.
  • To provide you a negotiating tool when purchasing real estate.
  • To find a likely price when listing your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you are ever involved in a civil case.
For a more detailed description of the appraisal process click here.


How is an appraisal different than a home inspection?   (Go to list of  questions)

Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the home from basement to attic. The standard property inspector's report will include an evaluation of the condition of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

Frankly, they share nothing in common. The CMA relies on indefinite market trends. The appraisal depends on specific proven comparable sales. The appraisal report will also contain location and building values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is who's doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who made a career on valuing real estate in and around Oakland 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 fee for assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (Go to list of  questions)

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:
  • Who engaged the appraiser 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.
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • 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 entailed in the activity of completing the assignment.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, what guarantee is there that the final number is accurate?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained an appropriate analysis of the data.

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

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

  • That a credible, substantiated appraisal report was imparted.
There are intense classroom and real world experience requirements that must be fulfilled in order to become a licensed appraiser in Michigan. Likewise, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Regulations regarding licensing and certification vary from state to state. However, licensing and certification typically translates to many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she is required to take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who hires an appraiser?   (Go to list of  questions)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure a home 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 information used to estimate values in Oakland County or other areas?   (Go to list of  questions)

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

General data is received from a many places. To research recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records 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 product.

And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.


Why do I need a professional appraisal?   (Go to list of  questions)

An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. When selling your home, an appraisal helps you set the most appropriate price. 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. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


What exactly is PMI and how can I get rid of it?   (Go to list of  questions)

PMI is an acronym 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 property is less than what is owed 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.

Is PMI something increasing your monthly mortgage payment?Call O'Neil Appraisal, LLC today at 248 674-3333 or send us an e-mail. Documentation of your home's present value could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Go to list of  questions)

The first step in most appraisals is the home inspection. 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 features. 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 get in our way while we measure the structure. On the inside, make sure the appraiser can easily access 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).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Brag sheet that lists major home improvements and enhancements, 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).
  • A list of "proposed" improvements if the property is to be appraised "as complete".

Define "Market Value"   (Go to list of  questions)

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."



Who actually owns the appraisal report?   (Go to list of  questions)

In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the report - 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define how the appraisal can be used; 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.


I want to get more for my house. Where should I spend money renovating?   (Go to list of  questions)

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 investment. 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, something that may not add value would be painting just for the sake of redecorating.