Lake Area Appraisal Firm has answers to "Frequently Asked Questions"

Lake Area Appraisal Firm is willing to handle any inquiries you might have about appraisals in Lake Charles and Calcasieu County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to request services from Lake Area Appraisal Firm?
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's in an appraisal report?
Once the appraisal has been completed, how can I have confidence that the value conclusion is veritable?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does Lake Area Appraisal Firm get the data used to estimate values in Calcasieu County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Go to list of  questions)

The procedure of writing an appraisal report consists of an evaluation which forms an opinion of value. The real estate appraiser will use a few "approaches," typically three, to draw up the estimation of market value. One of them is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach deals with finding similar houses in the vicinity and discovering the value based on making a comparison of those houses to the home being investigated. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a residence. The Income Approach is mainly 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   (Go to list of  questions)

An appraiser produces an unbiased and well justified opinion of market value, often in the context of a real estate sale. Appraisers show their expert conclusions in appraisal reports.


What would cause me to request services from Lake Area Appraisal Firm?   (Go to list of  questions)

There are many reasons to get an appraisal from Lake Area Appraisal Firm with the usual reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:
  • To get a loan.
  • If you would like to reduce your property tax obligations.
  • To show a homeowner has 30% equity and remove insurance.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To provide you a negotiating tool when purchasing real estate.
  • To find an honest price when listing your home.
  • To protect 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 help.
If you need more information regarding the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (Go to list of  questions)

Appraisers do not do complete home inspections and are not home inspectors. The point of a home inspection is to investigate the structure of the house from foundation to top. The stereotypical home 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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Frankly, they have nothing in common. The CMA uses market trends to conduct most of their business. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also contain location and construction values. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the largest differentiator is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. 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 fee for work they perform, regardless of their value conclusion.

What's in an appraisal report?   (Go to list of  questions)

The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • 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 appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • 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 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 involved in the process of completing the assignment.
For a more in depth view of what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, how can I have confidence that the value conclusion is veritable?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • That the information analysis implemented in the appraisal was suitable.

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

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

  • That a solid, substantiated appraisal report was communicated.
There are intense classroom and practical experience requirements that must be satisfied in order to achieve the title of "licensed appraiser" in Louisiana. In addition, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to list of  questions) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he/she must then take continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Go to list of  questions)

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

Where does Lake Area Appraisal Firm get the data used to estimate values in Calcasieu County or other areas?   (Go to list of  questions)

Compiling information is one of the primary functions of an appraiser. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is collected from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers often 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 past experience in doing assignments for other properties in the same market.

What can a full appraisal do for me?   (Go to list of  questions)

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 assists you in setting a price that maximizes profit and reduces time on the market. 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 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?   (Go to list of  questions)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers 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. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Has your real estate appreciated since you first purchased? Call Lake Area Appraisal Firm today at (337)602-6222. You may be able to save money by removing your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection   (Go to list of  questions)

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

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if readily available).
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Most recent real estate tax bill and or legal description of the property.
  • Brag sheet that lists 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 copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "Market Value"   (Go to list of  questions)

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 actually owns the appraisal report?   (Go to list of  questions)

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 appraisal - 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 stated otherwise, the home owner can do whatever they want with the appraisal.

Are some home improvements more worthwhile than others?   (Go to list of  questions)

Like all things real estate, this is dependent on a home's location. 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

No matter where you go, however, renovating a kitchen is almost always a safe move. 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, an improvement that may not increase your value would be painting just for the sake of redecorating.