Higgins Appraisal has answers to "Frequently Asked Questions"

Higgins Appraisal is always eager to address any questions you might have about appraisals or real estate in Ship Bottom and Ocean County. Feel free to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What would cause me to need services from Higgins Appraisal?
How is an appraisal different than a home inspection?
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 value indicated is veritable?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Ocean 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?
How do I get ready for the 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?



Define the term "Appraisal"   (Back to top)

An appraiser provides an evaluation that leads to an opinion of value. The appraiser will use a several "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves discerning what the improvements would cost minus physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which involves making a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser generates a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers show their expert conclusions in appraisal reports.


What would cause me to need services from Higgins Appraisal?   (Back to top)

There are a lot of reasons to get an appraisal from Higgins Appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax obligations.
  • To show a homeowner has 30% equity and remove insurance.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To offer you a leg-up when purchasing a home.
  • To determine a reasonable property value when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every home.
  • If you are ever involved in a civil case.
For a more detailed explanation of the appraisal process click here.


How is an appraisal different than a home inspection?   (Back to top)

The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party evaluation of the livable structure and appliances of a house, from the roof to the foundation. Commonly, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

To be blunt, it's like comparing broadband and dial-up. The CMA relies on indefinite market trends. An appraisal is based on comparable sales that can be proven by public record. Location and architectural costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is who's creating the report. 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 has made a career out of valuing properties. 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 previously agreed upon sum for work they perform, regardless of their outcome.

What are the contents of an appraisal report?   (Back to top)

Every appraisal should indicate a credible estimate of value and will document the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • 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!)
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
  • 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 included in the process of completing the job.
For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what assurance is there that the value indicated is veritable?   (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • That the information analysis contained in the appraisal was proper.

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

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

  • The final appraisal report was clear, credible and not easily discredited.
To become a state licensed appraiser, there are extensive education requirements as well as real world experience that must be logged. In addition, appraisers must stick to a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Back to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he or she must then take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Back to top)

Commonly, appraisers are called upon by lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

Collecting data is one of the primary roles of an appraiser. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is collected from a many places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To double-check actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

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

What can a full appraisal do for me?   (Back to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Higgins Appraisal is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. This additional policy covers the lender in case a borrower defaults on the loan and the value of the house is less than what the borrower still owes on 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? Contact Higgins Appraisal today at 609-494-0036 to see if you can save money by removing your Private Mortgage Insurance payment.

How do I get ready for the appraiser?   (Back 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 features. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help speed things along 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).
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "Market Value"   (Back to top)

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."

Who has rights to the appraisal report?   (Back to top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 entitled 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 situations, the appraiser may define 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.

I want to get more for my house. Where should I spend money renovating?   (Back to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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.

As a rule, the most value returned from renovating a home comes in the kitchen. 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 weren't far behind, 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.