Word Sherrill Appraisal Co. has answers to "Frequently Asked Questions"

Word Sherrill Appraisal Co. is more than happy to answer any concerns you might have about appraisals or real estate in Boerne and Kendall County. Contact Word Sherrill Appraisal Co. today to learn how we can help solve your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What are the reasons a person would request services from Word Sherrill Appraisal Co.?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Upon completion of the appraisal, what guarantee is there that the value conclusion is valid?
How are appraisers certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Kendall County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



What is an appraisal?   (Return to top)

An appraiser performs an evaluation that generates an opinion of value. The appraiser will use a few "approaches," typically three, to arrive at the estimation of market value. One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, less the age and physical dilapidation, plus the land value. The Sales Comparison Approach deals with finding comparable houses nearby and finding value based on making a comparison of those prior sales to the home being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

What does an appraiser do?   (Return to top)

An appraiser provides a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers exhibit their expert conclusions in appraisal reports.


What are the reasons a person would request services from Word Sherrill Appraisal Co.?   (Return to top)

There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To show a homeowner has 30% equity and remove insurance.
  • To fight high property taxes.
  • To handle an estate.
  • To provide you an edge when purchasing a home.
  • To figure out a reasonable price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you are ever involved in a lawsuit.
If you need more information regarding the appraisal process, please click here.


How is an appraiser different than a home inspector?   (Return to top)

The appraiser is not a home inspector and he or she does not do a complete home inspection. An inspection is a third-party evaluation of the livable structure and electrical and mechanical systems of a home, from the roof to the bottom. The archetypal property inspector's report will contain an evaluation of the integrity of the home's heating systems, 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.

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

Simply, they share nothing in common. What the CMA depends on are ill-defined trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also contain neighborhood and building prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who has formed their livelihood on valuing properties in and around Kendall County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.

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

Each report should indicate a supported estimate of value and should clearly state the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the appraisal.
  • The reason for the assignment.
  • The type of value reported and a definition of that value.
  • The effective date of the value opinion.
  • Pertinent property characteristics, including: location, physical description, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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 considered to complete the job.
For a more comprehensive view of the work 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 valid?   (Return to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal used analysis of the information.

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

  • That appraisal services were done in a careful and judicious fashion.

  • That a believable, defensible appraisal report was imparted.
There are intense education and real world experience requirements that must be adhered to in order to become a licensed appraiser in Texas. Plus, appraisers must stick to a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Return to top) Licensing and certification requires classroom study, tests and practical experience. Once an appraiser is licensed, he/she is required to engage in continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who do appraisers work for?   (Return to top)

Typically, appraisers are called upon by lenders to estimate the value of real estate involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Kendall County or other areas?   (Return to top)

Collecting data is one of the primary tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is gathered from a variety of sources. To find out about recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other courthouse 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 service.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.

How can a licensed appraiser help me?   (Return to top)

An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. When selling your house, an appraisal will help you determine 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 house 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?   (Return to top)

PMI stands for Private Mortgage Insurance. It covers the lender if a borrower is unable to pay on the loan and the market price of the house is less than the balance of 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 the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Word Sherrill Appraisal Co. has years of experience with real estate value trends in Boerne and Kendall County. Contact us today.

How do I get ready for the appraiser?   (Return 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 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 (gates aren't locked, etc). Trim any bushes and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access appliances 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 plot plan or survey of the house and land (if readily available).
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (Return to 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?   (Return to top)

For mortgage transactions, the lender requests 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 scenarios, the appraiser may define the purpose of the appraisal; 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.

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

The answer to this is different depending upon the location of the home. 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.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.