Hammond Bowerman & Associates, Inc. has answers to "Frequently Asked Questions"


	Hammond Bowerman & Associates, Inc. is always eager to elaborate on any concerns you might have about appraisals or real estate in Baltimore County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What would cause me to require services from Hammond Bowerman & Associates, Inc.?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Upon completion of the report, what assurance is there that the final number is valid?
What does it mean for an appraiser to be licensed?
Who hires an appraiser?
Where does an appraiser get the data used to estimate values in Baltimore County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Describe an appraisal (Return to top)

The appraisal process is an evaluation that generates an opinion of value. This opinion or estimate is figured by a formal process that commonly uses three "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 figuring what the improvements would cost minus physical deterioration, plus the land value. The Sales Comparison Approach involves searching for similar homes in the vicinity and finding value based on comparing those homes to the house in question. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is generally used for finding 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 (Return to top)

An appraiser generates an objective and well supported assessment of market value, to be used in making real estate transactions. Appraisers show their expert investigation in appraisal reports.

What would cause me to require services from Hammond Bowerman & Associates, Inc.? (Return to top)

There are a lot of reasons to purchase an appraisal from Hammond Bowerman & Associates, Inc. with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining 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 inflated property taxes.
If you need to take care of an estate.
To provide you a negotiating tool when purchasing real estate.
To find a likely property value when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Because a government agency such as the IRS requires it.
If you ever find yourself in a civil case.

For a more detailed explanation of the appraisal process click here.

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

The appraiser is not a home inspector nor does he/she do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the property from bottom to attic. Usually, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, 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.

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

Simply, they have nothing in common. The CMA utilizes market trends to create most of their business. Appraisals use comparable sales which are verifiable resources. Area and architectural prices are also precedent in an appraisal. 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.

But the most significant factor is the person doing the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. 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 are the contents of an appraisal report? (Return to top)

Every report must reflect a credible estimate of value and should clearly state the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the appraisal.
The type of value contained and a definition of that value.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible considerations.
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 activity of completing the job.

For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what assurance is there that the final number is valid? (Return to top)

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

The appraisal contained an appropriate analysis of the information.

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

That appraisal services were provided in a careful and cognizant manner.

The final appraisal report was understandable, legitimate and not easily discredited.

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

(Return to top) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisory appraiser. 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 hires an appraiser? (Return to top)

Mortgage lenders are an appraiser's most likely client, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Baltimore County or other areas? (Return to top)

One of the main tasks an appraiser engages in is to collect data. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is collected from a numerous places. To find out about recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. 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 product.

And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

Why do I need a professional appraisal? (Return to top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal helps you set 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 house 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? (Return to top)

PMI is short for for Private Mortgage Insurance. It covers the lender if a borrower defaults on the loan and the market price of the property is lower than the balance of 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.


	Does your monthly house payment include a fee for PMI?Call Hammond Bowerman & Associates, Inc. today at (410) 335-0470 or send us an e-mail. A new appraisal could save you thousands.

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

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 status of its amenities. 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 relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to items like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

Records on the latest purchase of the property in the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
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).
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .

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

Once complete, who actually owns the appraisal report? (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. 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 appraisal - 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.

This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

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

It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 were second, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.