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Bob Gibson & Associates has answers to "Frequently Asked Questions"

Bob Gibson & Associates is always willing to address any questions you might have about appraisals in Craighead County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would a person need services from Bob Gibson & Associates?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
After completing the report, what guarantee is there that the value conclusion is accurate?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does Bob Gibson & Associates get the information used to estimate values in Craighead County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (See list of FAQ's)

An appraisal is an evaluation allowing the appraiser to come to an opinion of value. This opinion or estimate is arrived at by using a formal process that commonly utilizes the three main "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar homes in close proximity and discovering the value based on comparing those prior sales to the home in question. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of 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 capital a property produce.

Describe what an appraiser does   (See list of FAQ's)

An appraiser generates a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers document their professional findings in appraisal reports.


Why would a person need services from Bob Gibson & Associates?   (See list of FAQ's)

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 obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To fight inflated property taxes.
  • If you need to take care of an estate.
  • To provide you an edge when purchasing a home.
  • To determine the most probable property value when putting your home on the market.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • 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 extensive explanation of the appraisal process click here.


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

The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will inspect the structure of the home, from the top 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 visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)?   (See list of FAQ's)

Frankly, it's like comparing Shakespeare to reality TV. What the CMA relies upon are ill-defined trends. The appraisal is based on similar valid comparable sales. Location and construction values are also precedent in an appraisal. A CMA delivers 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. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Arkansas licensed professional who made their livelihood on valuing real estate in and around Craighead County creates the appraisal. Moreover, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

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

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
  • The client and other intended users.
  • The intended use of the report.
  • The reason for the appraisal.
  • The type of value contained and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.(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 valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
  • 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 entailed in the activity of completing the assignment.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report


After completing the report, what guarantee is there that the value conclusion is accurate?   (See list of FAQ's)

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

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

  • That appraisal services were provided in a careful and judicious manner.

  • The final appraisal report was easy to explain, legitimate and defensible.
To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be attained - all with the end goal of being able to render unbiased value opinions. In addition, appraisers must stick to a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once licensed, he or she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (See list of FAQ's)

Typically, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does Bob Gibson & Associates get the information used to estimate values in Craighead County or other areas?   (See list of FAQ's)

Gathering data is one of the main things an appraiser does. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is received from a many sources. To look up recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

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


Why should I hire a licensed appraiser?   (See list of FAQ's)

An appraisal is a worthwhile whenever your home's value is relevant to some financial decision. 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. For parties settling an estate or divorce, an appraisal from Bob Gibson & Associates is the best way to ensure assets are divided 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?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. This supplemental plan takes care of the lender if a borrower is unable to pay on the loan and the value of the house is lower than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Does your monthly loan payment have a lineitem for PMI?Call Bob Gibson & Associates today at 870-932-5206 or send us an e-mail. Documentation of your home's current value could save you thousands.

How do I get ready for the appraiser?   (See list of FAQ's)

We begin 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. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Any information on the purchase of the property for the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Most recent real estate tax bill from Craighead and or legal description of the property.
  • A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • Information on "Homeowners Associations" or condominium covenants and fees.

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."



Who has rights to 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 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may stipulate 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.


Are some home improvements more worthwhile than others?   (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

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