Sullivan Appraisal Services has answers to "Frequently Asked Questions"

Sullivan Appraisal Services is always more than happy to answer any concerns you might have about appraisals in Kinnelon and Morris County. Contact us today to learn how we can help you with your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons a person would need your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the appraisal has been delivered, how can I have assurance that the final number is veritable?
What goes into an appraiser's certification?
Who hires Sullivan Appraisal Services
Where does Sullivan Appraisal Services get the information used to estimate values in Morris County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (Back to top)

The appraisal process is an estimation that generates an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which deals with figuring a comparison to similar properties nearby. Being the most popular approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a residence. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser generates a fair and credible assessment of market value, often in the context of a real estate purchase. Appraisers exhibit their professional analysis in appraisal reports.


What are the reasons a person would need your services?   (Back to top)

There are a lot of reasons to purchase an appraisal from Sullivan Appraisal Services with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • To get a loan.
  • To reduce your tax burden.
  • To show a homeowner has 30% equity and remove insurance.
  • To contest inflated property taxes.
  • If you need to take care of an estate.
  • To offer you an edge when purchasing a home.
  • To figure out a likely property value when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • 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 help.
For a more detailed explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Back to top)

Appraisers do not do perform residential property inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the house from basement to top. The usual house inspector's report will include an evaluation of the integrity of the house's heating system, 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)?   (Back to top)

Honestly, they share nothing in common. The CMA uses market trends to conduct most of their business. An appraisal relies on comparable sales that can be verified by records. The appraisal report will also include neighborhood and building prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is who's doing the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, New Jersey licensed professional who has formed a career on valuing properties in and around Morris County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for assignments, regardless of their value conclusion.

What's in an appraisal report?   (Back to top)

Every appraisal should demonstrate a believable estimate of value and must document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • 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!)
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
  • 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 detailed view of what goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been delivered, how can I have assurance that the final number is veritable?   (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal contained a suitable analysis of the information.

  • Whether individually or collectively, there were no grave errors contained in the report, nor any relevant details left out.

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

  • That a trustworthy, defensible appraisal report was conferred.
To become a state licensed appraiser, there are strenuous education requirements as well as on the jobexperience that must be logged. In addition, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Licensing and certification is achieved through classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she is required to engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who hires Sullivan Appraisal Services   (Back to top)

Mortgage lenders are an appraiser's typical client, using their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Sullivan Appraisal Services get the information used to estimate values in Morris County or other areas?   (Back to top)

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

General data is collected from a number of sources. To look up recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.

And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


Why should I hire a licensed appraiser?   (Back to top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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 house 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?   (Back to top)

PMI is an acronym for Private Mortgage Insurance. This additional policy takes care of the lender if 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.

Has your real estate appreciated since you first purchased? Call Sullivan Appraisal Services today at 201-337-8459 to see if you can save money by removing your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal inspection   (Back to top)

The first step in most appraisals is the home inspection. 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 amenities. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can get to items like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • Most recent real estate tax bill from Morris and or legal description of the property.

How does an appraiser define "Market Value"?   (Back to top)

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."



Does the appraisal belong to the bank or the consumer?   (Back to top)

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 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may state how the appraisal can be used; 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.


I want to get more for my house. Where should I spend money renovating?   (Back to top)

Like all things real estate, this is dependent on a home's location. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.