APPRAISALS UNLIMITED, INC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The procedure of creating an appraisal consists of an investigation which leads to an opinion of value. The appraiser will typically use a number of "approaches," typically three, to come to the estimation of market value. One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, less the age and physical deterioration, plus the land value. The Sales Comparison Approach deals with finding similar properties nearby and discovering the value based on making a comparison of those houses to the home being investigated. Being the most popular approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a residence. One of the least common approaches in appraising residential properties 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 building.
What does an appraiser do?(Return to top) An appraiser forumlates an objective and well substantiated determination of market value, often in the context of a real estate exchange. Appraisers reveal the details of their expert investigation in appraisal reports.
Why would someone need services from APPRAISALS UNLIMITED, INC?(Return to top) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
What is the difference between an appraisal and a home inspection? (Return to top)Home inspectors do not produce an opinion of value and are not appraisers. A third-party home inspector will judge the structure of the house, from the roof to the bottom. Generally, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity 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)?(Return to top) Frankly, it's night and day. What the CMA depends on are ill-defined trends. Appraisals use comparable sales which are verifiable resources. The appraisal report will also include neighborhood and building prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent voice, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the value of the home.
What can I expect to see in my appraisal report? (Return to top)The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
After completing the appraisal, what guarantee is there that the value indicated is accurate?(Return to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who do appraisers work for?(Return to top) Most of the time, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Meigs County or other areas?(Return to top) One of the most important activities of an appraiser is to gather data. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.
How can a licensed appraiser help me?(Return to top) If you're making any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out a 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 commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from APPRAISALS UNLIMITED, INC is the best documentation to ensure assets are split up evenly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Return to top) PMI is an acronym for Private Mortgage Insurance. It covers the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the balance of 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.
Do you need anything from me in advance?(Return to top) We start with an inspection of the home. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "Market Value"(Return to top) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns 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 entitled to a copy of the report - it's usually included with all the other closing documents - but is not entitled 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 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 do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Return to top) It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
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 are right up there with kitchens, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.