Joel Ward Appraisals has answers to "Frequently Asked Questions"

Joel Ward Appraisals is always willing to talk to you about any concerns you might have about appraisals or real estate in Champaign County. Contact Joel Ward Appraisals today to see how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
What would cause me to request your services?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Once the assignment has been completed, what assurance is there that the value conclusion is accurate?
What does it mean for an appraiser to be licensed?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Champaign County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



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

An appraisal report is an evaluation leading to an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or valuation. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the methods is the Sales Comparison Approach - which deals with making a comparable analysis to other similar nearby properties which have recently sold. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a house. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to figure the market value of a property based on what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (See list of FAQ's)

An appraiser provides a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers demonstrate their investigation in appraisal reports.


What would cause me to request your services?   (See list of FAQ's)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To challenge improperly assessed property taxes.
  • To settle an estate.
  • To give you a leg-up when purchasing real estate.
  • To find an honest price when putting your home on the market.
  • 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 lawsuit.
Click here for a more extensive explanation of the process involved in getting an appraisal.


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

The appraiser is not a home inspector and does not do a complete home inspection. An inspection is a third-party evaluation of the accessible structure and systems of a home, from the top to the bottom. For the most part, a home inspection report will explain the amenities and the necessities 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Frankly, they have nothing in common. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are valid resources. Also, the appraisal verifies other factors like condition, neighborhood and replacement costs. 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.

The person behind the report is frankly the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the agent, whose income is tied to the price of the home.

What does the appraisal report contain?   (See list of FAQ's)

Each appraisal should demonstrate a believable estimate of value and must identify the following:
  • The client and other intended users.
  • The intended use of the report.
  • The appraisal's purpose.
  • The type of value contained and a definition of that value.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical attributes, 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 items.
  • 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.
  • The scope of work used to complete the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, what assurance is there that the value conclusion is accurate?   (See list of FAQ's)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal contained an appropriate analysis of the data.

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

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

  • The final appraisal report was transparent, sound and defensible.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that enable us to produce an unbiased opinion. Plus, appraisers must obey a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (See list of FAQ's) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or 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 typical client, requiring their services to ensure a home 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 an appraiser get the data used to estimate values in Champaign County or other areas?   (See list of FAQ's)

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

General data is collected from a variety of places. To research recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents. Appraisers routinely need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal?   (See list of FAQ's)

If you're making any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. When 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 parties settling an estate or divorce, an appraisal from Joel Ward Appraisals is the best documentation to ensure assets are divided properly. 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?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the value of the home is lower 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.

Did you secure your mortgage with less than 20% down? Contact Joel Ward Appraisals today at (217) 355-3909 to see if you can get rid of your Private Mortgage Insurance premium.

Do you need anything from me in advance?   (See list of FAQ's)

We begin with an inspection of the home. 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. 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 bushes and move 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.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • A survey or plot map of the property and building (if readily available).
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Most recent real estate tax bill from Champaign and or legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"?   (See list of FAQ's)

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?   (See list of FAQ's)

In most real estate transactions, the appraisal is ordered by the lender. 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 allowed 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 scenarios, the appraiser may stipulate 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.

I want to get more for my house. Where should I spend money renovating?   (See list of FAQ's)

It really depends on the market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.