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Blue Star Appraisals Inc. has answers to "Frequently Asked Questions"

Blue Star Appraisals Inc. is eager to answer any questions you might have about appraisals in Dallas and Dallas County. Contact Blue Star Appraisals Inc. today to learn how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to request services from Blue Star Appraisals Inc.?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Upon completion of the appraisal, how can I have assurance that the final number is trustworthy?
What does it mean for an appraiser to be licensed?
Who are an appraiser's customers?
Where does Blue Star Appraisals Inc. get the information used to estimate values in Dallas County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



What is an appraisal?   (See list of FAQ's)

The procedure of writing an appraisal consists of an inspection which forms an opinion of value. This opinion or estimate is discerned using a formal method that generally utilizes the three main "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find the value of a house; it involves discerning what the improvements would cost less physical deterioration, plus the land value. The Sales Comparison Approach deals with finding similar homes in the vicinity and discovering the value based on comparing those homes to the home being investigated. Being the most common approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residence. One of the least common approaches in appraising houses 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 income produced by the building.

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

An appraiser offers an impartial and well substantiated assessment of market value, often in the context of a real estate sale. Appraisers show their expert findings in appraisal reports.


What would cause me to request services from Blue Star Appraisals Inc.?   (See list of FAQ's)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an report include:
  • To obtain a loan.
  • If you would like to reduce your property tax burden.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To challenge high 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 selling your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every house.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process dealing with getting an appraisal.


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

Home inspectors do not come to 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 appliances of a house, from the roof to the bottom. The stereotypical property inspector's report will contain an evaluation of the condition of the property'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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Simply put, it's night and day. The CMA utilizes market trends to generate most of their business. An appraisal utilizes comparable sales that can be verified by records. The appraisal report will also include area and building prices. 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, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for work they perform, regardless of their value conclusion.

What's in an appraisal report?   (See list of FAQ's)

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The reason for the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.
  • Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the real property interest 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 other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was involved in the process of completing the assignment.
For a more detailed view of all 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 trustworthy?   (See list of FAQ's)

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

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

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

  • The final appraisal report was clear, legitimate and conclusive.
There are intense classroom and practical experience requirements that must be met in order to get an appraisal license in Texas. Likewise, appraisers must follow a strict 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 insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Licensing and certification takes classroom study, tests and real world experience. Once an appraiser is licensed, he/she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

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

Mortgage lenders are an appraiser's most likely client, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Blue Star Appraisals Inc. get the information used to estimate values in Dallas County or other areas?   (See list of FAQ's)

Gathering information is one of the primary occupations of an appraiser. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.


Why should I hire a licensed appraiser?   (See list of FAQ's)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Blue Star Appraisals Inc. is the best way to ensure assets are split up 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?   (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on 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.

Is PMI a part of your monthly mortgage payment?Call Blue Star Appraisals Inc. today at 972.387.8163 or send us an e-mail. A current appraisal could save you thousands.

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

The first step in most appraisals is the property 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 condition of its features. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if readily available).
  • List of personal property to be sold with the home.
  • Title policy that describes encroachments or easements.
  • Any 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".

What does "Market Value" mean?   (See list of FAQ's)

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 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 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 hires an appraiser directly. In these scenarios, the appraiser may state 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 do whatever they want with the appraisal.


Which home renovations add the most to the price?   (See list of FAQ's)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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.

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 weren't far behind, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.