Clark Appraisal Group, Inc has answers to "Frequently Asked Questions"

Clark Appraisal Group, Inc is eager to handle any questions you might have about appraisals or real estate in Memphis and Shelby County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would someone require services from Clark Appraisal Group, Inc ?
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 trustworthy?
What are the requirements to be a certified appraiser?
Who hires Clark Appraisal Group, Inc
Where does Clark Appraisal Group, Inc get the data used to estimate values in Shelby County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (Back to top)

The procedure of performing an appraisal deals with an estimation which forms an opinion of value. The real estate appraiser will use a few "approaches," typically three, to conclude the estimation of market value. One of them is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves finding similar properties nearby and discerning value based on comparing those homes to the home being appraised. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a home. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (Back to top)

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


Why would someone require services from Clark Appraisal Group, Inc ?   (Back to top)

There are a lot of reasons to order an appraisal from Clark Appraisal Group, Inc with the usual reason being real estate and mortgage transactions. Some other reasons for getting an report include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To fight inflated property taxes.
  • To deal with an estate.
  • To provide you a negotiating tool when purchasing a home.
  • 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.
  • If you ever find yourself in a lawsuit.
Click here for a more detailed explanation of the process dealing with getting an appraisal.


How is an appraisal different than a home inspection?   (Back to top)

Home inspectors do not generate an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the livable structure and appliances of a house, from the roof to the foundation. The stereotypical property inspector's report will include an evaluation of the condition of the home's heating system, 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?   (Back to top)

Simply put, it's apples and oranges. What the CMA relies upon are vague trends. An appraisal relies on comparable sales that can be verified by public record. The appraisal report will also include location and construction values. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Tennessee licensed professional who has formed their livelihood on valuing homes in and around Shelby County creates the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the value of the home.

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

Each appraisal should demonstrate a credible value opinion and must clearly state the following:
  • The client and other intended users.
  • 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!)
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed 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 job.
For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what guarantee is there that the final number is trustworthy?   (Back to top)

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

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

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

  • The final appraisal report was transparent, credible and not easily discredited.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that enable us to formulate an unbiased opinion. Likewise, appraisers must obey a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Back to top) Licensing and certification takes classroom study, tests and experience working under a supervisory appraiser. Once licensed, he/she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Clark Appraisal Group, Inc    (Back to top)

Typically, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Clark Appraisal Group, Inc get the data used to estimate values in Shelby County or other areas?   (Back to top)

One of the primary tasks an appraiser engages in is to assimilate data. Data can be divided into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is received from a many places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

And most importantly, the appraiser assembles 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 making some sort of financial decision and the value of your home matters, you'll want an appraisal. When selling your house, an appraisal will help you determine the most appropriate price. When buying, be sure you're not overpaying by getting 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. Without knowing its real value, wise financial decisions are impossible.

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

PMI stands for Private Mortgage Insurance. It protects 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. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Does your monthly house payment have a lineitem for PMI?Call Clark Appraisal Group, Inc today at 901-682-7012 or send us an e-mail. A new appraisal could save you thousands.

Do you need anything from the homeowner in advance?   (Back to top)

The first step in most appraisals is the property inspection. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access items 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 plot plan or survey of the house and land (if readily available).
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • 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.

Define "Market Value"   (Back to top)

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."

Does the appraisal belong to the bank or the consumer?   (Back to top)

For mortgage transactions, the lender requests 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 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating?   (Back to top)

This really depends on where the home is. 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. 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.