Ted Biczak & Associates has answers to "Frequently Asked Questions"

Ted Biczak & Associates is always willing to talk to you about any inquiries you might have about appraisals in Morris County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would a person need a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the report has been delivered, how can I have certainty that the final number is legitimate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does Ted Biczak & Associates get the information used to estimate values in Morris County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (Back to top)

The procedure of writing an appraisal deals with an evaluation which leads to an opinion of value. The real estate appraiser will use a several "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, less the depreciation and physical dilapidation, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which concerns figuring a comparison to comparable properties nearby. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a property. One of the least common approaches in appraising homes is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Back to top)

An appraiser generates an impartial and well substantiated assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their expert analysis in appraisal reports.


Why would a person need a real estate appraisal?   (Back to top)

There are a lot of reasons to order an appraisal from Ted Biczak & Associates with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
  • To obtain a loan.
  • If you would like to lower your property tax obligations.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To challenge inflated property taxes.
  • To deal with an estate.
  • To provide you a leg-up when purchasing a home.
  • To determine the most probable sales price when listing your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process involved in getting an appraisal.


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

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party investigation of the accessible structure and appliances of a home, from the top to the foundation. Commonly, a home inspection report will explain 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, visible 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)?   (Back to top)

Simply, they have nothing in common. What the CMA relies upon are vague trends. The appraisal relies on similar valid comparable sales. Also, the appraisal checks other factors like condition, neighborhood and construction prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat fee for work they perform, regardless of their value conclusion.

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

Every report must demonstrate a credible estimate of value and must clearly state the following:
  • The client 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 appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property characteristics, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
  • 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.
  • What was included in the process of completing the assignment.
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report


Once the report has been delivered, how can I have certainty that the final number is legitimate?   (Back to top)

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

  • That crucial errors of omission or commission were not committed individually or collectively.

  • That appraisal services were done in a careful and conscientious manner.

  • That a solid, defensible appraisal report was communicated.
To become a state licensed appraiser, there are education requirements as well as experience that must be logged - all with the end goal of being able to render unbiased value opinions. Likewise, appraisers must abide by a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Back to top)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Ted Biczak & Associates get the information used to estimate values in Morris County or other areas?   (Back to top)

One of the primary tasks an appraiser must accomplish is to collect data. Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a variety of sources. To look up recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, 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 an appraisal. For those selling a home, you'll want to determine 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. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. 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?   (Back to top)

PMI is an acronym for Private Mortgage Insurance. This supplemental plan covers the lender in case a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

Does your monthly house payment include a fee for PMI?Call Ted Biczak & Associates today at (973) 838-6996 or send us an e-mail. A new appraisal could save you thousands.

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

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. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • A survey or plot map of the property and building (if readily available).
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Title policy that lists 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).
  • Information on "Homeowners Associations" or condominium covenants and fees.

What is "Market Value?"   (Back 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 actually owns the appraisal report?   (Back to top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may define 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?   (Back to top)

The answer to this is different depending upon the location of the home. 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 most value returned 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, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.