Allegiance Appraisals has answers to "Frequently Asked Questions"

Allegiance Appraisals is ready to address any inquiries you might have about appraisals or real estate in Hitchcock and Galveston County. Contact Allegiance Appraisals today to learn how we can help you with your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons someone would need your services?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Once the report has been completed, what guarantee is there that the final number is accurate?
What goes into an appraiser's certification?
Who hires an appraiser?
Where does Allegiance Appraisals get the information used to estimate values in Galveston County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Who actually owns the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (See list of FAQ's)

The method of producing an appraisal deals with an investigation which forms an opinion of value. This opinion or estimate is concluded using a formal method that commonly utilizes three "common approaches to value". The Cost Approach is one of the processes that appraisers use to find value; it involves concluding what the improvements would cost without physical degradation, adding the land value. Another of the methods is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a residential property. One of the least common approaches in appraising homes is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the income produced by the building.

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

An appraiser forumlates a professional, unbiased determination of market value, in the support of real property transactions. Appraisers summarize their findings in appraisal reports.


What are the reasons someone would need your services?   (See list of FAQ's)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an report include:
  • To get a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To contest high property taxes.
  • If you need to take care of an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To find an honest property value when selling real estate.
  • 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 civil case.
If you need more information about the appraisal process, please click here.


How is an appraisal different than a home inspection?   (See list of FAQ's)

The appraiser is not a home inspector and does not do a comprehensive home inspection. An inspection is a third-party investigation of the available structure and mechanical systems of a house, from the roof to the foundation. The standard house 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 visible 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?   (See list of FAQ's)

Frankly, it's like comparing opera to country. The CMA uses market trends to conduct most of their business. An appraisal is based on comparable sales that can be verified by records. The appraisal report will also include location and building values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who made their livelihood on valuing real estate in and around Galveston County creates the appraisal. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the price of the home.

What does the appraisal report contain?   (See list of FAQ's)

Each report should demonstrate a believable estimate of value and should clearly state the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • The type of value contained and a definition of the value reported.
  • 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 description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
  • Any 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 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

Once the report has been completed, what guarantee is there that the final number is accurate?   (See list of FAQ's)

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

  • Whether individually or collectively, there were no significant errors contained in the appraisal, nor any material details left out.

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

  • The final appraisal report was understandable, legitimate and conclusive.
There are intense education and real world experience requirements that must be fulfilled in order to achieve the designation of "licensed appraiser" in Texas. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting 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 are different from state to state. However, licensing and certification typically translates to many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he/she must then complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who hires an appraiser?   (See list of FAQ's)

Typically, appraisers are hired by lenders to render a value opinion on property involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Allegiance Appraisals get the information used to estimate values in Galveston County or other areas?   (See list of FAQ's)

Gathering data is one of the primary occupations of an appraiser. Data can be split into Specific or General. Specific data is 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 number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

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

Why do I need a professional appraisal?   (See list of FAQ's)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (See list of FAQ's)

PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in the event a borrower is unable to pay on the loan and the value of the home is lower than what the borrower still owes 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 pays for the appraisal in a matter of months. Nobody is more qualified than Allegiance Appraisals when it comes to analyzing real estate appreciation in Hitchcock and Galveston County. Contact us today.

Should I do anything in advance of the appraisal appointment   (See list of FAQ's)

The first step in most appraisals is the property 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to items 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:
  • Records on the latest purchase of the property in the last three years.
  • List of personal property to be sold with the building.
  • Most recent real estate tax bill from Galveston and or legal description of the property.
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements if the property is to be appraised "as complete".

Define "Market Value"   (See list of FAQ's)

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."

Who actually owns the appraisal report?   (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 bundled with all the other closing documents - but is not allowed 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 state 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.

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

The answer to this is different depending upon the location of the home. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

As a rule, the best ROI 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 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.