Ohanaka & Associates has answers to "Frequently Asked Questions"

Ohanaka & Associates is always eager to elaborate on any questions you might have about appraisals or real estate in Davidson County. Contact Ohanaka & Associates today to learn how we can help solve your valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons a person would request 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?
After completing the report, how can I have a guarantee that the value conclusion is legitimate?
What are the requirements to be a certified appraiser?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Davidson County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (See list of FAQ's)

An appraisal report is an inspection leading to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a house; it involves figuring what the improvements would cost less physical degradation, plus the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which concerns figuring a comparison to similar properties close by. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating 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 provides a fair and credible assessment of market value, often in the context of a real estate exchange. Appraisers demonstrate their investigation in appraisal reports.


What are the reasons a person would request a real estate appraisal?   (See list of FAQ's)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • To get a loan.
  • If you would like to lower your property tax obligations.
  • To show a homeowner has 30% equity and remove insurance.
  • To fight inflated property taxes.
  • To handle an estate.
  • To offer you an edge when purchasing real estate.
  • To find a likely sales price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
Click here for a more detailed explanation of the process about getting an appraisal.


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

Appraisers do not do perform residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a property, from the top to the bottom. Usually, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity 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)

Frankly, they have nothing in common. The CMA relies on indefinite local market trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include location and construction prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

Who's creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Tennessee licensed professional who bases their livelihood on valuing properties in and around Davidson County is behind 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 collect only a flat fee for assignments, regardless of their outcome.

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

Each report must indicate a credible value opinion and must identify the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The reason for the appraisal.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible items.
  • All 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 when completing the appraisal.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


After completing the report, how can I have a guarantee that the value conclusion is legitimate?   (See list of FAQ's)

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

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

  • That appraisal services were rendered in a careful and cognizant manner.

  • The final appraisal report was understandable, credible and not easily discredited.
To become a state licensed appraiser, there are intense education requirements as well as on the jobexperience that must be logged. Likewise, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Licensing and certification requires classroom study, tests and practical experience. 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 do appraisers work for?   (See list of FAQ's)

Typically, appraisers are called upon by lenders to estimate the value of property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Davidson County or other areas?   (See list of FAQ's)

Collecting data is one of the primary things an appraiser performs. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a number of places. To find out about recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.


Why should I hire a licensed appraiser?   (See list of FAQ's)

An appraisal is a valuable tool whenever your home's value is relevant to a financial decision. If you're selling your home, an appraisal helps you set the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Ohanaka & Associates is the best way to ensure assets are divided fairly. A house 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?   (See list of FAQ's)

PMI is an acronym for Private Mortgage Insurance. This supplemental policy guards the lender if a borrower is unable to pay on the loan and the value of the home is less than what the borrower still owes on the loan. 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.

Has your real estate appreciated since you first purchased? Call Ohanaka & Associates today at 6154695530. You may be able to cancel your Private Mortgage Insurance payment.

Does the appraiser need anything from me in advance?   (See list of FAQ's)

The first step in most appraisals is the property 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 condition of its amenities. On the home's interior, make sure it is clutter free and that we can find our way to 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 expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
  • Any information on the purchase of the property for the last three years.
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades 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 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?   (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.

This rule doesn't apply 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 do whatever they want with the appraisal.


I want to get more for my house. Where should I spend money renovating?   (See list of FAQ's)

This really depends on where the home is. 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.

As a rule, the best ROI from renovating a home comes in the kitchen. 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 were second, yielding 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.