W.R. McCain & Associates, Inc. has answers to "Frequently Asked Questions"

W.R. McCain & Associates, Inc. is willing to talk to you about any inquiries you might have about appraisals or real estate in Wicomico County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would require a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the assignment has been delivered, what guarantee is there that the value conclusion is accurate?
How difficult is it to become certified?
Who hires an appraiser?
Where does W.R. McCain & Associates, Inc. get the data used to estimate values in Wicomico County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal"   (Top)

The procedure of writing an appraisal report deals with an inspection which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or estimate. One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, minus age and physical deterioration, plus the land value. Easily the most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which involves making a comparison to comparable properties nearby. The Sales Comparison Approach is normally the most definitive and clearest indicator of a liklely sales price for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Top)

An appraiser offers a fair and credible determination of market value, often in the context of a real estate purchase. Appraisers summarize their professional findings in appraisal reports.

What are the reasons I would require a real estate appraisal?   (Top)

There are a lot of reasons to order an appraisal from W.R. McCain & Associates, Inc. with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal report include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To show a homeowner has 30% equity and remove PMI.
  • To fight inflated property taxes.
  • To settle an estate.
  • To give you a negotiating tool when purchasing a home.
  • To determine a reasonable price when selling your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
If you need a more detailed explanation of the appraisal process, please click here.

How is an appraiser different than a home inspector?   (Top)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the home, from the top to the bottom. For the most part, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible 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)?   (Top)

Simply, they have nothing in common. The CMA relies on indistinct trends in the market. The appraisal depends on specific definite comparable sales. Also, the appraisal looks at other factors like condition, area and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's creating the report is actually the most significant 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, Maryland licensed professional who bases a career on valuing homes in and around Wicomico County creates the appraisal. Likewise, the agent has a vested interest in 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 assignments, regardless of their value conclusion.

What are the contents of an appraisal report?   (Top)

Every appraisal must indicate a supported value opinion and must clearly state the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • 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 valuation, such as personal property, trade fixtures 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 considered when completing the job.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been delivered, what guarantee is there that the value conclusion is accurate?   (Top)

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

  • Whether individually or collectively, there were no substantial errors contained in the report, nor any relevant details left out.

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

  • The final appraisal report was clear, credible and defensible.
To become a state licensed appraiser, we must meet intense education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must stick to a meticulous 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 insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Top) Licensing and certification takes classroom study, tests and experience working under a supervisory appraiser. 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 hires an appraiser?   (Top)

Mortgage lenders are an appraiser's typical client, requesting their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does W.R. McCain & Associates, Inc. get the data used to estimate values in Wicomico County or other areas?   (Top)

One of the primary activities of an appraiser is to assimilate property data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is received from a variety of places. To research recent sales to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need to report when a property lies 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 assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

What can a full appraisal do for me?   (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 house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from W.R. McCain & Associates, Inc. is the best way to ensure assets are split up 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 short for for Private Mortgage Insurance. This added plan protects the lender in the event a borrower is unable to pay on the loan and the market price 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.

Did you secure your mortgage with less than 20% down? Contact W.R. McCain & Associates, Inc. today at (410) 742-3201 to see if you can get rid of your Private Mortgage Insurance payment.

Do you need anything from me in advance?   (Top)

We start 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. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if available).
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Most recent real estate tax bill from Wicomico and or legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • A list of "suggested" improvements when the property is being appraised "as complete".

How does an appraiser 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."

Who has rights to the appraisal report?   (Top)

In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the appraisal - 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 hires an appraiser directly. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (Top)

The added value of a particular amenity truly depends on the local market. 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.

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 were second, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.