Associated Appraisers has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) The appraisal process is an evaluation that generates an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or estimate. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of a liklely sales price for a residence. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.
Describe what an appraiser does(See list of FAQ's) An appraiser offers an impartial and well substantiated determination of market value, often in the context of a real estate sale. Appraisers summarize their expert findings in appraisal reports.
What would cause me to require your services?(See list of FAQ's) There are many reasons to purchase an appraisal from Associated Appraisers with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an report include:
Is an appraisal the same as a home inspection? (See list of FAQ's)The appraiser is not a home inspector and does not do a complete home inspection. An inspection is a third-party evaluation of the livable structure and mechanical systems of a property, from the top to the bottom. The stereotypical home inspector's report will include an evaluation of the integrity of the home'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)?(See list of FAQ's) Honestly, they have nothing in common. The CMA depends on vague market trends. The appraisal is based on specific verifiable comparable sales. Location and architectural costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who makes a living 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? (See list of FAQ's)The main point of an appraisal document is to provide 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 trustworthy?(See list of FAQ's) In the documentation of an appraisal, each appraiser must make sure of the following:
Who engages the services of appraisers?(See list of FAQ's) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Fairfax County or other areas?(See list of FAQ's) One of the primary activities of an appraiser is to assimilate data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a many places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why do I need a professional appraisal?(See list of FAQ's) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from Associated Appraisers is the best documentation to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan protects the lender in case a borrower is unable to pay on the loan and the market price of the home is less than the balance of 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?(See list of FAQ's) The first step in most appraisals is the home inspection. During this process, the appraiser 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(See list of FAQ's) In real estate appraising, 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 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(See list of FAQ's) The answer to this is different depending upon the location of the home. 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 most value returned from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.