Norm W. Scharkopf & Associates, LLC has answers to "Frequently Asked Questions"


	Norm W. Scharkopf & Associates, LLC is always happy to handle any concerns you might have about appraisals or real estate in Annapolis and Anne Arundel County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons I would require your services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Once the report has been completed, how can I have confidence that the value indicated is veritable?
How are appraisers certified?
Who do appraisers work for?
Where does Norm W. Scharkopf & Associates, LLC get the data used to estimate values in Anne Arundel County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Define the term "Appraisal" (See list of FAQ's)

An appraiser provides an evaluation that produces an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or valuation. The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves finding what the improvements would cost minus physical depreciation, plus the land value. The Sales Comparison Approach involves finding comparable houses in the vicinity and figuring out the value based on comparing those homes to the house being investigated. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residence. 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? (See list of FAQ's)

An appraiser produces a professional, unbiased determination of market value, in the support of real estate exchanges. Appraisers show their professional conclusions in appraisal reports.

What are the reasons I would require your services? (See list of FAQ's)

There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal include:

If you are applying for a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To fight inflated property taxes.
To settle an estate.
To give you a negotiating tool when purchasing real estate.
To figure out a reasonable sales price when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every house.
If you are ever involved in a civil case.

Click here for a more detailed explanation of the process about getting an appraisal.

Is an appraisal the same as a home inspection? (See list of FAQ's)

The appraiser is not a home inspector nor does he/she do a complete home inspection. A third-party home inspector will investigate the structure of the home, from the roof to the foundation. Commonly, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (See list of FAQ's)

Honestly, they share nothing in common. What the CMA depends on are superficial trends. Appraisals use similar sales which are valid resources. Location and architectural values are also precedent in an appraisal. 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 largest differentiator is who's behind the report. Real estate agents, who may not have a complete understanding 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 flat sum for assignments, regardless of their outcome.

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

Each report should demonstrate a supported estimate of value and will document the following:

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The reason for the appraisal.
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!)
Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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 entailed in the process of completing the appraisal.

For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, how can I have confidence that the value indicated is veritable? (See list of FAQ's)

In the documentation of an appraisal, each appraiser must make sure of the following:

That the information analysis utilized in the appraisal was proper.

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

That appraisal services were delivered in a careful and judicious fashion.

The final appraisal report was easy to explain, legitimate and conclusive.

To become a state licensed appraiser, we must fulfill intense education and experience requirements that train us to formulate an unbiased opinion. In addition, appraisers must obey a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(See list of FAQ's) Licensing and certification requires classroom study, tests and experience working under a supervisor. Once licensed, he/she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for? (See list of FAQ's)

Commonly, appraisers are employed by mortgage lenders to render a value opinion on property involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does Norm W. Scharkopf & Associates, LLC get the data used to estimate values in Anne Arundel County or other areas? (See list of FAQ's)

Collecting data is one of the primary tasks an appraiser engages in. 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 gathered by the appraiser while on site.

General data is received from a numerous sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

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

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Norm W. Scharkopf & Associates, LLC is the best documentation to ensure assets are 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? (See list of FAQ's)

PMI is short for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower is unable to pay on the loan and the value of the home 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.


	Has your real estate appreciated since you first purchased? Contact Norm W. Scharkopf & Associates, LLC today at 410-571-3061 to see if you can save money by removing your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal appointment (See list of FAQ's)

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 amenities. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help expedite our work plus ensure a more accurate report, try if possible to have the following items:

A survey or plot map of the property and building (if available).
Title policy that lists encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
Most recent real estate tax bill from Anne Arundel and or legal description of the property.

How does an appraiser define "Market Value"? (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."

Does the appraisal belong to the bank or the consumer? (See list of FAQ's)

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 entitled to a copy of the report - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these situations, 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.

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

Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the most value returned 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, work that may not increase your value would be painting just for the sake of redecorating.