Appraisal OPTIONS has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) The appraisal process is an estimation that generates an opinion of value. The appraiser will typically use a several "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves finding what the improvements would cost less physical depreciation, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of value for a residence. One of the least common approaches in appraising houses 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 income produced by the property.
What does an appraiser do?(See list of FAQ's) An appraiser offers a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers summarize their professional analysis in appraisal reports.
What are the reasons a person would require a real estate appraisal?(See list of FAQ's) There are a lot of reasons to order an appraisal from Appraisal OPTIONS with the most common reason being real estate and mortgage transactions. Other reasons for ordering an report include:
How is an appraisal different than a home inspection? (See list of FAQ's)The appraiser is not a home inspector and he or she does not do a full home inspection. The point of a home inspection is to evaluate the structure of the house from basement to attic. Commonly, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, 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.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Honestly, they have nothing in common. What the CMA depends on are superficial trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include location and construction values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made their livelihood on valuing real estate in and around Whiteside County creates the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the value of the home.
What does the appraisal report contain? (See list of FAQ's)The main objective of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the appraisal, how can I have a guarantee that the final number is valid?(See list of FAQ's) In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers?(See list of FAQ's) Mortgage lenders are an appraiser's typical 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 for legal settlements, tax matters and investment decisions.
Where does Appraisal OPTIONS get the information used to estimate values in Whiteside County or other areas?(See list of FAQ's) One of the most important activities of an appraiser is to compile property data. Data can be split 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 number of places. To look up recent sales to be used as "comps", an appraiser will often use 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 is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) An appraisal is a worthwhile anytime your home's value is pertinent to some financial decision. If you're selling your house, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home 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. It takes care of the lender in case a borrower defaults on the loan and the market price of the house is lower 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.
How do I get ready for the appraiser?(See list of FAQ's) 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 condition of its amenities. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "Market Value"?(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may stipulate the purpose of the appraisal; 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.
Which home renovations add the most to the price?(See list of FAQ's) The added value of a particular amenity truly depends on the local market. 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 move. 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, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.