Bone Island Appraisal Company has answers to "Frequently Asked Questions"


	Bone Island Appraisal Company is happy to handle any inquiries you might have about appraisals or real estate in Key West and Monroe County. Contact Bone Island Appraisal Company today to see how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
Why would someone need a real estate appraisal?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Upon completion of the report, what assurance is there that the value conclusion is accurate?
How hard is it to become certified?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Monroe 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?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

Describe an appraisal (Top)

The method of creating an appraisal consists of an estimation which forms an opinion of value. The real estate appraiser must use a few "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that appraisers use to find value; it involves discerning what the improvements would cost less physical depreciation, adding the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparison to other similar nearby properties which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.

Describe what an appraiser does (Top)

An appraiser generates an impartial and well supported assessment of market value, often in the context of a real estate exchange. Appraisers demonstrate their analysis in appraisal reports.

Why would someone need a real estate appraisal? (Top)

There are many reasons to order an appraisal from Bone Island Appraisal Company with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:

To get a loan.
If you would like to lower your property tax burden.
To show a homeowner has 30% equity and remove PMI.
To contest high property taxes.
If you need to settle an estate.
To offer you an edge when purchasing a home.
To find a reasonable sales price when listing your home.
To protect 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 ever find yourself in a civil case.

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

How is an appraisal different than a home inspection? (Top)

The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will evaluate the structure of the house, from the top to the bottom. The archetypal property inspector's report will contain an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal? (Top)

Simply put, it's like comparing opera to country. What the CMA relies upon are ill-defined trends. An appraisal relies on comparable sales that can be validated by records. Location and building costs are also important in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear 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. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their outcome.

What's in an appraisal report? (Top)

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, you'll usually see the following:

The client and other intended users.
How the appraisal is supposed to be used.
The purpose of the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Relevant property characteristics, including: location, physical attributes, 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 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.
The scope of work used while working up the job.

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

Upon completion of the report, what assurance is there that the value conclusion is accurate? (Top)

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

The appraisal contained analysis of the data.

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

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

That a trustworthy, substantiated appraisal report was communicated.

To become a state licensed appraiser, we must fulfill extensive education and experience requirements that prepare us to produce an unbiased opinion. Plus, appraisers must obey a stringent 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).

(Top) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Top)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure property 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 Monroe County or other areas? (Top)

One of the primary tasks an appraiser engages in is to gather property data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is gathered from a variety of places. To look up recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents. Appraisers often have to report when a property is 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 collective knowledge gained from creating appraisals for other properties in the same market.

Why should I hire a licensed appraiser? (Top)

An appraisal is a valuable tool whenever the value of your home is relevant to some financial decision. For those selling a home, you'll want to figure out a 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. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Bone Island Appraisal Company is the best way to ensure assets are divided properly. A house 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? (Top)

PMI is an acronym for Private Mortgage Insurance. PMI guards the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than what is owed 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.


	The money you keep from dropping your PMI will make up for the cost of the appraisal in a matter of months. Bone Island Appraisal Company is a name you can trust when it comes to real estate value trends in Key West and Monroe County. Contact us today.

How do I get ready for the appraiser? (Top)

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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.

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

Any records on the purchase of the property for the last three years.
List of personal property to be sold with the building.
Title policy that describes encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A list of "proposed" improvements when the property is being appraised "as complete".

Define "Market Value" (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."

Does the appraisal belong to the bank or the consumer? (Top)

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 appraisal - 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 cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others? (Top)

The added value of a particular amenity truly depends on the local market. 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 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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.