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N.J. Picone & Associates, Inc. has answers to "Frequently Asked Questions"

N.J. Picone & Associates, Inc. is prepared to elaborate on any questions you might have about appraisals in Solon and Cuyahoga County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to request services from N.J. Picone & Associates, Inc.?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Once the assignment has been delivered, how can I have confidence that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does N.J. Picone & Associates, Inc. get the data used to estimate values in Cuyahoga County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Define the term "Appraisal"   (See list of FAQ's)

An appraisal is an investigation allowing the appraiser to come to an opinion of value. The real estate appraiser will typically use a several "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find value; it involves finding what the improvements would cost less physical degradation, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparison to other similar nearby properties which have recently sold. Usually, 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 of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (See list of FAQ's)

An appraiser generates a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers show their professional investigation in appraisal reports.


What would cause me to request services from N.J. Picone & Associates, Inc.?   (See list of FAQ's)

There are a lot of reasons to obtain an appraisal from N.J. Picone & Associates, Inc. with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
  • To get a loan.
  • If you would like to reduce your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To contest high property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To find a reasonable sales price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every house.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
For a more detailed explanation of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (See list of FAQ's)

Appraisers do not do provide residential property inspections and are not home inspectors. A third-party home inspector will investigate the structure of the 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 services, 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 visible structures.

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

To be blunt, it's like comparing broadband and dial-up. What the CMA relies upon are ill-defined trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include area and construction prices. 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.

Who's creating the report is actually the biggest 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. A certified, Ohio licensed professional who has formed their livelihood on valuing homes in and around Cuyahoga 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 accept a previously agreed upon sum for work they perform, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (See list of FAQ's)

Each report should indicate a believable value opinion and must identify the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed 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 entailed in the process of completing the assignment.
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment has been delivered, how can I have confidence that the final number is trustworthy?   (See list of FAQ's)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained an appropriate analysis of the data.

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

  • That appraisal services were rendered in a careful and cognizant manner.

  • That a solid, substantiated appraisal report was imparted.
To become a state licensed appraiser, we must meet extensive education and experience requirements that give us the background to formulate an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing 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 vary from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisor. Once licensed, he/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 employs appraisers?   (See list of FAQ's)

Typically, appraisers are employed by lenders to render a value opinion on a house involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does N.J. Picone & Associates, Inc. get the data used to estimate values in Cuyahoga County or other areas?   (See list of FAQ's)

One of the primary activities of an appraiser is to assimilate data. 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 might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely 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 product.

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


What can a full appraisal do for me?   (See list of FAQ's)

If you're involved in any kind of financial decision and the value of your home matters, you'll want an appraisal. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from N.J. Picone & Associates, Inc. is the best documentation to ensure assets are divided fairly. Simply put, a home 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?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. This supplementary plan guards the lender in the event a borrower is unable to pay on the loan and the value of the property 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.

Does your monthly house payment have a lineitem for PMI?Call N.J. Picone & Associates, Inc. today at (440) 349-2554 or send us an e-mail. Documentation of your home's present value could save you thousands.

Does the appraiser need anything from me in advance?   (See list of FAQ's)

The first step in most appraisals is the home inspection. During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). 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 easily access items like furnaces and water heaters.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • A list of "proposed" 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 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?   (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 certainly entitled to a copy of the report - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate the purpose of the appraisal; 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.


Which home renovations add the most to the price?   (See list of FAQ's)

It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.