Dale W. Peterson has answers to "Frequently Asked Questions"

Dale W. Peterson is eager to talk to you about any concerns you might have about appraisals or real estate in Racine County. Contact Dale W. Peterson today to see how we can help you with your specific valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person need services from Dale W. Peterson?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the appraisal has been completed, how can I have a guarantee that the value conclusion is trustworthy?
How are appraisers certified?
Who do appraisers work for?
Where does Dale W. Peterson get the information used to estimate values in Racine County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
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   (Return to top)

The method of performing an appraisal report consists of an evaluation which forms an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate. One of the three is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparison to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (Return to top)

An appraiser produces a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers present their investigation in appraisal reports.


Why would a person need services from Dale W. Peterson?   (Return to top)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal report include:
  • To get a loan.
  • If you would like to reduce your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To contest inflated property taxes.
  • To handle an estate.
  • To give you an edge when purchasing real estate.
  • To determine a likely property value when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every home.
  • If you are ever involved in a civil case.
For a more extensive description of the appraisal process click here.


How is an appraisal different than a home inspection?   (Return to top)

Appraisers do not do complete house inspections and are not home inspectors. An inspection is a third-party evaluation of the available structure and mechanical systems of a property, from the roof to the foundation. The archetypal house inspector's report will include an evaluation of the condition of the property'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)?   (Return to top)

Honestly, they share nothing in common. The CMA relies on indefinite trends in the market. The appraisal depends on similar definite comparable sales. Location and construction 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 the person behind the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.

What are the contents of an appraisal report?   (Return to top)

Every appraisal must demonstrate a credible value opinion and must clearly state the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • The type of value contained and a definition of that value.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • 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, items that are more or less permanently installed and even intangible factors.
  • 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 when completing the assignment.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been completed, how can I have a guarantee that the value conclusion is trustworthy?   (Return to top)

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

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

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

  • That a trustworthy, substantiated appraisal report was conferred.
To become a state licensed appraiser, there are intense education requirements as well as real world experience that must be logged. Plus, appraisers must stick to 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).


   (Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he/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 do appraisers work for?   (Return to top)

Mortgage lenders are an appraiser's typical client, requesting their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Dale W. Peterson get the information used to estimate values in Racine County or other areas?   (Return to top)

Compiling data is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is collected from a number of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we use tax records and other public documents. Flood zone data is gathered 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 past experience in creating appraisals for other properties in the same market.


Why do I need a professional appraisal?   (Return to top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Dale W. Peterson is the best documentation to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


What exactly is PMI and how can I get rid of it?   (Return to top)

PMI is short for for Private Mortgage Insurance. This supplementary plan takes care of the lender in the event a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes 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 home value appreciated since you first purchased? Contact Dale W. Peterson today at (262) 763-8161. You may be able to save money by removing your Private Mortgage Insurance payment.

Does the appraiser need anything from the homeowner in advance?   (Return to top)

The first step in most appraisals is the home inspection. During this process, we 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if readily available).
  • 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.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements when the property is being appraised "as complete".

Define "Market Value"   (Return to top)

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?   (Return 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 bundled with all the other closing documents - but is not allowed 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 cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.


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

This really depends on where the home is. 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 investment. 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 were second, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.