Finlay & Company (334)395-8185 has answers to "Frequently Asked Questions"

Finlay & Company (334)395-8185 is happy to handle any questions you might have about appraisals or real estate in Montgomery and Montgomery County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to need services from Finlay & Company (334)395-8185?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the appraisal, how can I have a guarantee that the value indicated is legitimate?
How difficult is it to become certified?
Who employs appraisers?
Where does Finlay & Company (334)395-8185 get the information used to estimate values in Montgomery County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
Define "Market Value"
Who actually owns the appraisal report?
Which home renovations add the most to the price?



What is an appraisal?   (Back to top)

The procedure of performing an appraisal report deals with an inspection which leads to an opinion of value. The appraiser must use a number of "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the processes that appraisers use to find value; it involves concluding what the improvements would cost without physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which concerns finding a comparison to other similar nearby properties which have recently sold. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a home. The Income Approach is primarily used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

What does an appraiser do?   (Back to top)

An appraiser produces a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers present their investigation in appraisal reports.


What would cause me to need services from Finlay & Company (334)395-8185?   (Back to top)

There are a lot of reasons to get an appraisal from Finlay & Company (334)395-8185 with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To fight improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To figure out the most probable sales price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • If you ever find yourself in a civil case.
Click here for a more extensive explanation of the process involved in getting an appraisal.


How is an appraiser different than a home inspector?   (Back to top)

Appraisers do not do complete residential property inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and mechanical systems of a property, from the top to the bottom. The stereotypical property inspector's report will contain an evaluation of the condition of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Back to top)

Honestly, they share nothing in common. The CMA depends on vague trends in the market. An appraisal utilizes comparable sales that can be proven by public record. The appraisal report will also include location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is the person creating 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 has formed their livelihood on valuing real estate in and around Montgomery County is behind the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.

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

Each appraisal should indicate a supported estimate of value and will document 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.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest 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 other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was included in the activity of completing the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, how can I have a guarantee that the value indicated is legitimate?   (Back to top)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was proper.

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

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

  • The final appraisal report was transparent, legitimate and defensible.
To become a state licensed appraiser, we must meet extensive education and experience requirements that give us the background to produce an unbiased opinion. Likewise, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Back to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisor. Once licensed, he or she must then engage in continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers?   (Back to top)

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

Where does Finlay & Company (334)395-8185 get the information used to estimate values in Montgomery County or other areas?   (Back to top)

One of the most important activities of an appraiser is to collect property data. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.

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

How can a licensed appraiser help me?   (Back to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal will help you determine the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI stands for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the market price of the home is lower 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.

The amount you keep from getting rid of your PMI pays for the appraisal in no time. Finlay & Company (334)395-8185 stays current with value trends in Montgomery and Montgomery County. Contact us today.

Does the appraiser need anything from me 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. On the home's interior, pick up any clutter and make sure we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • Information on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Title policy that lists encroachments or easements.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (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"   (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 actually owns 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 certainly entitled to a copy of the report - 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 engages an appraiser directly. 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 stipulated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price?   (Back to top)

This really depends on where the home is. 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. 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, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.