The Hohman Appraisal Company has answers to "Frequently Asked Questions"

The Hohman Appraisal Company is willing to elaborate on any inquiries you might have about appraisals or real estate in Polk County. Contact us today to learn how we can help you with your specific valuation problems.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to 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 does the appraisal report contain?
Once the appraisal has been completed, what assurance is there that the value conclusion is legitimate?
How difficult is it to become certified?
Who hires The Hohman Appraisal Company
Where does The Hohman Appraisal Company get the data used to estimate values in Polk County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Do you need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
How can I get the most ROI out of home improvements?



Define the term "Appraisal"   (See list of FAQ's)

The appraisal process is an evaluation that produces an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or valuation. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves figuring what the improvements would cost without physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar houses in close proximity and discerning value based on comparing those homes to the property in question. The Sales Comparison Approach is normally the most definitive and best indicator of a liklely sales price for a residence. One of the least common approaches in appraising homes is the Income Approach, which is generally used to figure the value of a property based on what an investor would pay based on the capital produced by the building.

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

An appraiser produces a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers summarize their professional findings in appraisal reports.


What would cause me to require a real estate appraisal?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal from The Hohman Appraisal Company with the most common reason being real estate and mortgage transactions. Some other reasons for ordering 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 Primary Mortgage Insurance.
  • To contest high property taxes.
  • To handle an estate.
  • To give you a leg-up when purchasing real estate.
  • To find a likely price when selling real estate.
  • 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 are ever involved in a lawsuit.
Click here for a more extensive explanation of the process of getting an appraisal.


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

Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the accessible structure and mechanical systems of a home, from the top to the bottom. For the most part, a home inspection report will evaluate the amenities and the requirements of the house: 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, exposed 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)?   (See list of FAQ's)

Honestly, they have nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use comparable sales which are verifiable resources. Area and construction values are also important in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the most significant factor is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made their livelihood on valuing real estate in and around Polk County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.

What does the appraisal report contain?   (See list of FAQ's)

Every report should reflect a believable estimate of value and should clearly state the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.(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 factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations 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.
  • The scope of work used to complete the appraisal.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been completed, what assurance is there that the value conclusion is legitimate?   (See list of FAQ's)

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

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

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

  • That a believable, supportable appraisal report was communicated.
There are intense education and real world experience requirements that must be met in order to get an appraisal license in Florida. In addition, appraisers must stick to a stringent 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).


   (See list of FAQ's) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she must then take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who hires The Hohman Appraisal Company   (See list of FAQ's)

Most of the time, appraisers are employed by lenders to render a value opinion on a home involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does The Hohman Appraisal Company get the data used to estimate values in Polk County or other areas?   (See list of FAQ's)

One of the most important things an appraiser does is to compile property data. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is gathered from a number of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

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


Why do I need a professional appraisal?   (See list of FAQ's)

An appraisal is a valuable tool anytime your home's value is pertinent to some financial decision. When selling your house, an appraisal will help you determine 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. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise 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 the common abbreviation for for Private Mortgage Insurance. PMI guards the lender if a borrower defaults on the loan and the market price of the house is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The savings from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. The Hohman Appraisal Company stays current with real estate value trends in WINTER HAVEN and Polk County. Contact us today.

Do you need anything from the homeowner in advance?   (See list of FAQ's)

We begin with an inspection of the home. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.

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 readily available).
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

How does an appraiser define "Market Value"?   (See list of FAQ's)

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."



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. 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.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.


How can I get the most ROI out of home improvements?   (See list of FAQ's)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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 weren't far behind, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.