Larry Jones Real Estate, Inc. has answers to "Frequently Asked Questions"

Larry Jones Real Estate, Inc. is ready to elaborate on any inquiries you might have about appraisals or real estate in Lubbock County. Contact Larry Jones Real Estate, Inc. today to see how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person need a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, what assurance is there that the value conclusion is valid?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does Larry Jones Real Estate, Inc. get the data used to estimate values in Lubbock 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?
Do you need anything from me in advance?
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (See list of FAQ's)

An appraisal report is an investigation allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the age and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparison to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to figure the market value of a property based on what an investor would pay based on the capital produced by the property.

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

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


Why would a person need a real estate appraisal?   (See list of FAQ's)

There are many reasons to obtain an appraisal from Larry Jones Real Estate, Inc. with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
  • To receive a loan.
  • If you would like to lower your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To contest inflated property taxes.
  • To deal with an estate.
  • To give you an edge when purchasing a home.
  • To figure out the most probable property value when selling your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process dealing with getting an appraisal.


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

Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. A third-party home inspector will inspect the structure of the home, from the top to the foundation. The stereotypical house inspector's report will contain an evaluation of the integrity of the property'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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Frankly, they have nothing in common. What the CMA depends on are ill-defined trends. Appraisals use comparable sales which are valid resources. Location and architectural prices are also a priority in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's behind the report. A CMA is created 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 bases their livelihood on valuing homes in and around Lubbock County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on 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 outcome.

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

Every appraisal must demonstrate a believable estimate of value and must clearly state the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
  • 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 activity of completing the job.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, what assurance is there that the value conclusion is valid?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained an appropriate analysis of the data.

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

  • That appraisal services were not carried out in a careless or negligent fashion.

  • That a credible, substantiated appraisal report was imparted.
There are intense education and on the job experience requirements that must be adhered to in order to become a licensed appraiser in Texas. In addition, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (See list of FAQ's) Licensing and certification is achieved through classroom study, tests and experience working under a supervisory appraiser. Once licensed, he or she must then take continuing education courses so the license remains current. To see the specific requirements for any state click here.

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

Most of the time, appraisers are hired by lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Larry Jones Real Estate, Inc. get the data used to estimate values in Lubbock County or other areas?   (See list of FAQ's)

Gathering data is one of the main tasks an appraiser performs. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a many places. To find out about recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other houses in the same market.

What can a full appraisal do for me?   (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. 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, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Larry Jones Real Estate, Inc. is the best documentation to ensure assets are split up evenly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. This supplemental plan guards the lender if a borrower defaults on the loan and the market price of the home is lower than the loan balance. 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 amount you keep from getting rid of your PMI pays for the appraisal in a matter of months. Larry Jones Real Estate, Inc. has years of experience with real estate value trends in Lubbock and Lubbock County. Contact us today.

Do you need anything from me in advance?   (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 amenities. On the home's interior, pick up any clutter and make sure we can find our way to 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.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • Any records on the purchase of the property for the last three years.
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A list of "suggested" improvements when the property is being appraised "as complete".

What is "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."

Once complete, who actually owns the appraisal report?   (See list of FAQ's)

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 certainly 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.

This rule doesn't apply when a home owner hires an appraiser directly. 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 noted otherwise, the home owner can use the appraisal for any purpose.

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

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

No matter where you go, however, renovating a kitchen is almost always a safe move. 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, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.