Gorelick Appraisals, Inc. has answers to "Frequently Asked Questions"


	Gorelick Appraisals, Inc. is willing to talk to you about any concerns you might have about appraisals in New Castle County. Contact Gorelick Appraisals, Inc. today to talk about how we can help solve your specific valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Upon completion of the appraisal, what guarantee is there that the value conclusion is veritable?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in New Castle 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?
Do you need anything from the homeowner in advance?
Define "Market Value"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Go to list of questions)

The appraisal process is an estimation that leads to an opinion of value. This opinion or estimate is arrived at through the use of a formal process that typically utilizes three "common approaches to value". One of them is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which involves concluding a comparison to comparable properties nearby. The Sales Comparison Approach is normally the most definitive and clearest indicator of a liklely sales price for a residence. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.

What does an appraiser do? (Go to list of questions)

An appraiser forumlates an unprejudiced and well substantiated assessment of market value, often in the context of a real estate exchange. Appraisers illustate their professional investigation in appraisal reports.

Why would someone request a real estate appraisal? (Go to list of questions)

There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:

If you are applying for 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 contest inflated property taxes.
To deal with an estate.
To offer you a negotiating tool when purchasing a home.
To determine a likely sales price when putting your home on the market.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you are ever involved in a lawsuit.

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

What is the difference between an appraisal and a home inspection? (Go to list of questions)

The appraiser is not a home inspector and does not do a complete home inspection. An inspection is a third-party investigation of the available structure and systems of a house, from the roof to the bottom. Commonly, 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Go to list of questions)

Simply put, it's like comparing broadband and dial-up. The CMA uses market trends to create most of their business. The appraisal relies on specific proven comparable sales. Location and construction values are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The person behind the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made a career on valuing properties in and around New Castle County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their value conclusion.

What does the appraisal report contain? (Go to list of questions)

Every report must demonstrate a believable estimate of value and will clearly state the following:

The client and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The purpose of the appraisal.
The type of value contained and a definition of that value.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, 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 factors.
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.
The scope of work used while working up the job.

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

Upon completion of the appraisal, what guarantee is there that the value conclusion is veritable? (Go to list of questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

That the information analysis implemented in the appraisal was proper.

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

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

The final appraisal report was transparent, credible and defensible.

There are intense education and on the job experience requirements that must be adhered to in order to achieve the designation of "licensed appraiser" in Delaware. Likewise, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and real world experience. Once licensed, he or she is required to engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who employs appraisers? (Go to list of questions)

Mortgage lenders are an appraiser's most likely client, needing their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does an appraiser get the data used to estimate values in New Castle County or other areas? (Go to list of questions)

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

General data is collected from a variety of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.

What can a full appraisal do for me? (Go to list of questions)

An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. If you're selling your house, an appraisal helps you set the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI is the common abbreviation for for Private Mortgage Insurance. PMI guards the lender in case a borrower doesn't pay on the loan and the value 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.


	Has your home value appreciated since you first purchased? Call Gorelick Appraisals, Inc. today at (302)-429-0576. You may be able to get rid of your Private Mortgage Insurance payment.

Do you need anything from the homeowner in advance? (Go to list of questions)

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 amenities. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

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

Any information on the purchase of the property for the last three years.
Written property agreements, such as a maintenance easement for a shared driveway.
Most recent real estate tax bill from New Castle and or legal description of the property.
A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "Market Value" (Go to list of questions)

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."

Once complete, who actually owns the appraisal report? (Go to list of questions)

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 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.

This rule doesn't apply when a home owner hires an appraiser directly. In these cases, the appraiser may stipulate 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 do whatever they want with the appraisal.

Are some home improvements more worthwhile than others? (Go to list of questions)

This really depends on where the home is. 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.

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 were second, yielding 85%. Adding bedrooms and baths can also boost 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.