Appraisal Trust Company, LLC has answers to "Frequently Asked Questions"

Appraisal Trust Company, LLC is willing to address any concerns you might have about appraisals in Knoxville and Knox County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would someone require services from Appraisal Trust Company, LLC?
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 appraisal is done, how can I have assurance that the final number is valid?
How are appraisers certified?
Who engages the services of appraisers?
Where does Appraisal Trust Company, LLC get the data used to estimate values in Knox County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the 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"   (List of questions)

The method of creating an appraisal consists of an evaluation which leads to an opinion of value. This opinion or estimate is found through a formal process that typically utilizes the three main "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, minus age and physical deterioration, plus the land value. The Sales Comparison Approach deals with finding comparable properties in the vicinity and discovering the value based on comparing those homes to the house being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.

Describe what an appraiser does   (List of questions)

An appraiser generates an impartial and well justified assessment of market value, often in the context of a real estate exchange. Appraisers summarize their findings in appraisal reports.


Why would someone require services from Appraisal Trust Company, LLC?   (List of questions)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
  • To obtain a loan.
  • To lower your property taxes.
  • To show a homeowner has 30% equity and remove insurance.
  • To challenge high property taxes.
  • To settle an estate.
  • To offer you an edge when purchasing a home.
  • To determine the most probable price when selling your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every property.
  • If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraisal different than a home inspection?   (List of questions)

The appraiser is not a home inspector and does not do a comprehensive home inspection. An inspection is a third-party evaluation of the livable structure and electrical and mechanical systems of a house, from the top to the foundation. The usual property inspector's report will contain an evaluation of the condition of the property's heating system, 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.

My agent performed a CMA for me. Is that the same as an appraisal?   (List of questions)

To be blunt, it's like comparing opera to country. What the CMA depends on are vague trends. An appraisal is based on comparable sales that can be validated by public record. Also, the appraisal checks other factors like condition, location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is the person doing the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who has formed a career on valuing properties in and around Knox County creates the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the property's value, unlike the agent, whose income is tied to the value of the home.

What does the appraisal report contain?   (List of questions)

The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the appraisal.
  • The type of value reported 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 attributes, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
  • All 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 included in the process of completing the assignment.
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal is done, how can I have assurance that the final number is valid?   (List of questions)

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

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

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

  • The final appraisal report was clear, legitimate and conclusive.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that train us to formulate an unbiased opinion. In addition, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he/she must then 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?   (List of questions)

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

Where does Appraisal Trust Company, LLC get the data used to estimate values in Knox County or other areas?   (List of questions)

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

General data is received from a variety of sources. 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 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 doing assignments for other houses in the same market.


What can a full appraisal do for me?   (List of questions)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine 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 Appraisal Trust Company, LLC is the best documentation to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (List of questions)

PMI stands for Private Mortgage Insurance. It covers the lender in the event a borrower doesn't pay on the loan and the market price of the home is less 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 include a fee for PMI?Call Appraisal Trust Company, LLC today at (865) 776-5482 or send us an e-mail. Documentation of your home's present value could save you thousands.

How do I get ready for the appraiser?   (List of questions)

The first step in most appraisals is the home inspection. During this process, the appraiser 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. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • Information on the latest purchase of the property in the last three years.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Title policy that lists encroachments or easements.
  • 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).
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

Define "Market Value"   (List of questions)

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?   (List of questions)

For mortgage transactions, the lender orders 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 included 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 hires an appraiser directly. In these cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.


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

The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the best ROI from renovating a home comes in the kitchen. 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, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.