Ferri Appraisals has answers to "Frequently Asked Questions"

Ferri Appraisals is always eager to talk to you about any questions you might have about appraisals in Cranston and Providence County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would someone need your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, how can I have certainty that the final number is valid?
How hard is it to become certified?
Who engages the services of appraisers?
Where does Ferri Appraisals get the data used to estimate values in Providence County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal inspection
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 procedure of producing an appraisal report consists of an estimation which leads to an opinion of value. This opinion or estimate is found using a formal process that typically uses three "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, less the depreciation and physical deterioration, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves concluding a comparison to comparable properties nearby. Being the most popular approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

Describe what an appraiser does   (Back to top)

An appraiser offers an unprejudiced and well supported determination of market value, often in the context of a real estate exchange. Appraisers exhibit their analysis in appraisal reports.


Why would someone need your services?   (Back to top)

There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • If you need to take care of an estate.
  • To provide you an edge when purchasing real estate.
  • To find a likely price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every home.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
For a more extensive explanation of the appraisal process click here.


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

Home inspectors do not produce an opinion of value and do not use the same forms as appraisers. An inspection is a third-party evaluation of the available structure and electrical and mechanical systems of a house, from the roof to the bottom. Usually, a home inspection report will explain the amenities and the necessities 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 visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (Back to top)

Simply put, it's like comparing broadband and dial-up. The CMA utilizes market trends to generate most of their business. The appraisal is reliant on specific valid comparable sales. In addition, the appraisal checks other factors like condition, neighborhood and building prices. 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.

But the most significant factor is the person behind the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for assignments, regardless of their outcome.

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

Each appraisal must indicate a supported value opinion and will document the following:
  • The client and other intended users.
  • The intended use of the report.
  • The appraisal's purpose.
  • The type of value reported and a definition of the value reported.
  • The effective date of the value opinion.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible items.
  • All 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.
  • The scope of work considered while working up the job.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, how can I have certainty that the final number is valid?   (Back to top)

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

  • Whether individually or collectively, there were no critical errors contained in the appraisal, nor any relevant details left out.

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

  • The final appraisal report was understandable, credible and conclusive.
To become a state licensed appraiser, there are education requirements as well as real world experience that must be logged. Plus, appraisers must follow a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for working up 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 vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Back to top)

Typically, appraisers are hired by mortgage 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 Ferri Appraisals get the data used to estimate values in Providence County or other areas?   (Back to top)

Compiling data is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is collected from a number of places. To find out about recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need 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 last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.

What can a full appraisal do for 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 a price that maximizes profit and reduces time on the market. 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. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (Back to top)

PMI is an acronym for Private Mortgage Insurance. PMI takes care of the lender if a borrower is unable to pay on the loan and the market price of the home is less 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 have less than 20% to put down on your mortgage? Call Ferri Appraisals today at 4014679616 to see if you can get rid of your Private Mortgage Insurance payment.

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

The first step in most appraisals is the home 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 the appraiser has easy access to the exterior of the house . Trim any shrubs and relocate any items that would make it difficult to 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:
  • Records on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A list of "proposed" improvements when the property is being 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 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 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 engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may define 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.

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

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

As a rule, the most value returned 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%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.