403 S Madison St
Montfort, WI 53569
Phone: 608-279-6541
Email: rollinghllc@gmail.com
ROLLING H LLC
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Appraisal Process

Breaking Down the the Appraisal Process

Getting a house is the largest transaction some of us might ever consider. It doesn't matter if it's where you raise your family, an additional vacation property or a rental fixer upper, purchasing real property is an involved transaction that requires multiple people working in concert to make it all happen.

To learn more about appraising, click here to see a short video or call us today to talk about your specific property.


Most of the participants are very familiar. The most familiar person in the transaction is the real estate agent. Next, the mortgage company provides the financial capital necessary to fund the exchange. Ensuring all areas of the exchange are completed and that the title is clear to pass to the buyer from the seller is the title company.

So who's responsible for making sure the property is consistent with the amount being paid?   In comes the appraiser.   We provide an unbiased opinion of what a buyer might expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional Wisconsin licensed appraiser from Rolling H LLC will ensure you as an interested party are informed.

The inspection is where an appraisal starts

Our first task at Rolling H LLC is to inspect the property to ascertain its true status. We must physically see aspects of the property, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they really exist and are in the condition a reasonable person would expect them to be. To ensure the stated size of the property has not been misrepresented and describe the layout of the house, the inspection often includes creating a sketch of the floor plan. Most importantly, we look for any obvious features - or defects - that would have an impact on the value of the house.

After the inspection, an appraiser employs two or three approaches when determining the value of real property: a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.

Cost Approach

This is where we use information on local construction costs, labor rates and other elements to derive how much it would cost to build a property comparable to the one being appraised. This estimate often sets the upper limit on what a property would sell for. It's also the least used predictor of value.

Paired Sales Analysis

Appraisers become very familiar with the neighborhoods in which they work. We thoroughly understand the value of certain features to the homeowners of that area. Then, the appraiser researches recent sales in the neighborhood and finds properties which are 'comparable' to the real estate in question. Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we add or subtract from each comparable's sales price so that they more accurately match the features of subject.

  • Say, for example, the comparable property has an extra half bath that the subject doesn't, the appraiser may subtract the value of that half bath from the sales price of the comparable.
  • However, in the case where the subject has something such as an extra half bath that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property.
At Rolling H LLC, we are experts when it comes to knowing the value of particular items in Southern Wisconsin neighborhoods. This approach to value is usually awarded the most consideration when an appraisal is for a home exchange.

Valuation Using the Income Approach

In the case of income producing properties - rental houses for example - we may use a third way of valuing a house. In this scenario, the amount of revenue the property yields is factored in with other rents in the area for comparable properties to give an indicator of the current value.

The Bottom Line

Combining information from all applicable approaches, the appraiser is then ready to put down an estimated market value for the subject property. The estimate of value on the appraisal report is not necessarily the final sales price even though it is likely the best indication of what a property could sell for in an open market. It's not uncommon for prices to be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'. But the appraised value is typically used as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace. At the end of the day: An appraiser from Rolling H LLC will guarantee you attain the most fair and balanced property value, so you can make wise real estate decisions.

Some useful hints to speed your appraisal along from Rolling H LLC

To appraise a property, an appraiser is required to be licensed by the state when the transaction involves any federal financial regulatory agency such as Freddie Mac, Office of Thrift Supervision, and the like. Just give us a call at 6082796541 if you have any questions about the appraisal process.

To speed up the appraisal process, it's recommended to have these documents ready for the appraiser:

  • A survey or plot map of the property and building (if available).

  • Any information on the purchase of the property for the last three years.

  • Written property agreements, such as a maintenance agreement for a shared driveway.

  • 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.

  • Title policy that lists encroachments or easements.

  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.

  • A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of energy efficiency upgrades or roof repairs) and permit confirmation (if available).

  • A copy of the current listing agreement with broker's data sheet and purchase agreement if a sale is "pending".

  • Information on "Homeowners Associations" or condominium covenants and fees.

  • A list of "proposed" improvements when the property is being appraised "as complete".

When the appraiser arrives, you do not need to accompany them along on the entire site inspection, but you should be present to answer inquiries about your property and identify any home improvements.

Here are a few other helpful tips:

  • Accessibility: Appraisers are very detailed in their inspections. We recommend that all areas of the home are accessible, especially the attic and crawl space.

  • Housekeeping: Appraisers see a lot of homes a year and aren't surprised at seeing a bit of clutter, but they're human beings too! A good impression can translate into a higher home value.

  • Maintenance: We often suggest fixing small things like leaky faucets, missing door handles and trim.

  • FHA and VA Inspection Items: If your borrower is trying to apply for either an FHA or VA loan, be sure to ask your appraiser if there are extra things that should be done before they come. Some things they may recommend might be: having smoke detectors on all levels and especially near bedrooms, where paint is peeling it should be scraped and repainted, eliminating pull-chain lights in areas other than the basement or attic.

Three approaches to value
There are three ways to determine the value of anything, and each plays a part in property appraisal.

The most widely-used and accepted in residential practice is the sales comparison approach.  This approach bases its opinion of value on what similar properties in the vicinity have sold for recently, with appropriate adjustments for time, acreage, living area, amenities and so on.  It is these adjustments where the expertise of the professional appraiser becomes necessary -- no computer can tell you how much or little to mark up for a fireplace without knowing the neighborhood or even talking to Realtors and recent buyers in the area about how important that amenity is in that particular location.

Another approach is the cost approach.  How much would a property cost to replace, that is, rebuild, minus "accrued depreciation," that is, depreciation that has occurred since the property actually was built?  The cost approach includes concepts like "economic life" and "effective age" that are mostly of use in determining the value of special use properties, special purpose properties or properties where subsequent structural improvements greatly impact value.

The third approach to value is called the income approach.  Some properties generate income for their owners -- the most obvious examples being rental properties such as apartment buildings, non owner-occupied houses and duplexes and the like.  The rental income an owner might reasonably expect from a property is part of its value.  For a purely owner-occupied residential property, this may not be applicable, but it can be important if the property is to be rented out or used otherwise to generate income, such as a storage facility, cell tower rental and office building.

What is USPAP?

USPAP, which you might hear pronounced like "YOOS-pap," is the Uniform Standards of Professional Appraisal Practice. USPAP is published and maintained by the Appraisal Standards Board (ASB) of the Appraisal Foundation, a non-governmental entity charged by Congress with promulgating appraisal standards.

USPAP is revised periodically, usually every year. It begins with a list of Definitions, and a Preamble defining the mission. It then declares a set of general Rules governing all disciplines of appraisal practice: The Ethics Rule, the Competency Rule, the Scope of Work Rule, the Jurisdictional Exception Rule, and the Supplemental Standards Rule. It then sets forth 10 appraisal Standards, each containing a number of Standards Rules. Each Standard covers in detail the different tasks an appraiser might perform in the course of developing and reporting an appraisal ("Real Property Appraisal Development"; "Real Property Appraisal Reporting"; "Business Appraisal, Development"; etc.). It includes a number of Statements on those 10 appraisal Standards, some retired, which are used to clarify or supplement the Standards. It also includes Advisory Opinions dealing with the application of the USPAP in various scenarios, such as "When does USPAP apply in valuation services?" and "Clarification of the client in a federally related transaction," which describe real-life problems and how they would be governed under the Rules and Standards of USPAP.

Every appraiser is charged with knowing and following USPAP, usually by operation of state law, and must complete Continuing Education periodically to relearn the basics and become familiar with new Advisory Opinions and annual changes to USPAP. USPAP may be considered the Bible of appraisal practice .