Precision Appraisal Services has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) An appraisal is a thought process allowing the appraiser to come to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Easily the most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which involves figuring a comparison to similar properties nearby. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(List of questions) An appraiser forumlates an objective and well justified opinion of market value, often in the context of a real estate sale. Appraisers illustate their investigation in appraisal reports.
Why would I need your services?(List of questions) There are many reasons to obtain an appraisal from Precision Appraisal Services with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal include:
Is an appraisal the same as a home inspection? (List of questions)Appraisers do not do perform house inspections and are not home inspectors. An inspection is a third-party evaluation of the accessible structure and appliances of a property, from the top to the foundation. Commonly, a home inspection report will discuss the amenities and the requirements of the house: air conditioning (weather permitting), electrical services, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Frankly, it's like comparing sugar and saccharin. The CMA depends on indistinct local market trends. An appraisal relies on comparable sales that can be validated by public record. Area and building prices are also important in an appraisal. All a CMA does is generate a "ball park 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. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.
What are the contents of an appraisal report? (List of questions)The main point of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, what assurance is there that the value indicated is legitimate?(List of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(List of questions) 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 an appraiser get the information used to estimate values in Wood County or other areas?(List of questions) Gathering data is one of the primary functions of an appraiser. Data can be described as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is collected from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
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?(List of questions) An appraisal is a worthwhile whenever your home's value is relevant to a financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Precision Appraisal Services is the best way to ensure assets are split up properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI is short for for Private Mortgage Insurance. PMI guards the lender in case a borrower is unable to pay on the loan and the value of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from the homeowner in advance?(List of questions) We start with an inspection of the home. 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 status of its features. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(List of questions) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(List of questions) In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these situations, 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.
I want to get more for my house. Where should I spend money renovating?(List of questions) This really depends on where the home is. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
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 weren't far behind, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.