GED Appraisal has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions) An appraiser performs an estimation that leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find the value of a property; it involves finding what the improvements would cost without physical deterioration, adding the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which involves making a comparison to similar houses close by. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.
Describe what an appraiser does(List of questions) An appraiser provides a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers summarize their professional investigation in appraisal reports.
What would cause me to require your services?(List of questions) There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
How is an appraiser different than a home inspector? (List of questions)Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the property from foundation to attic. The general house inspector's report will contain an evaluation of the integrity of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible 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)?(List of questions) Simply put, it's like comparing broadband and dial-up. What the CMA depends on are ill-defined trends. An appraisal is based on comparable sales that can be verified by public record. Area and construction costs are also a priority in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is who's behind the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the price of the home.
What can I expect to see in my appraisal report? (List of questions)Each appraisal must demonstrate a believable estimate of value and will identify the following:
Once the assignment is done, what guarantee is there that the final number is veritable?(List of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who hires an appraiser?(List of questions) Typically, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does GED Appraisal get the information used to estimate values in Roscommon County or other areas?(List of questions) Collecting data is one of the main tasks an appraiser performs. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is gathered from a variety of places. To research recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service. Tax records and other public 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 last but not least, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
How can a licensed appraiser help me?(List of questions) An appraisal is a worthwhile whenever the value of your home is relevant to a financial decision. When selling your house, an appraisal will help you determine the most appropriate price. 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. Simply put, a house 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?(List of questions) PMI stands for Private Mortgage Insurance. This supplementary policy covers the lender if a borrower defaults on the loan and the market price of the house 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.
How do I get ready for the appraiser?(List of questions) 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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(List of questions) 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?(List of questions) 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 appraisal - 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may state 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?(List of questions) A home's location - what city it is in and even what part of that city - is key to this popular question. 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, work that may not add value would be painting just for the sake of redecorating.