All Pro Appraisals has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Return to top) An appraiser provides an estimation that produces an opinion of value. This opinion or estimate is discerned by using a formal process that usually utilizes three "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a property; it involves finding what the improvements would cost without physical deterioration, plus the land value. Another of the processes is the Sales Comparison Approach - which concerns making a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is primarily used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(Return to top) An appraiser offers a fair and credible assessment of market value, in the support of real estate transactions. Appraisers demonstrate their expert investigation in appraisal reports.
Why would I require a real estate appraisal?(Return to top) There are a lot of reasons to get an appraisal from All Pro Appraisals with the most common reason being real estate and mortgage transactions. Other reasons for ordering an report include:
Is an appraisal the same as a home inspection? (Return to top)Home inspectors do not estimate an opinion of value and are not appraisers. The point of a home inspection is to evaluate the structure of the home from basement to rooftop. Generally, a home inspection report will evaluate the amenities and the necessities of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Return to top) Simply put, it's like comparing broadband and dial-up. The CMA relies on indefinite local market trends. An appraisal utilizes comparable sales that can be verified by public record. The appraisal report will also contain neighborhood and construction costs. 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 creating 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 has formed a career on valuing real estate in and around Suffolk County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their outcome.
What can I expect to see in my appraisal report? (Return to top)Each report must reflect a credible estimate of value and should identify the following:
After completing the appraisal, what assurance is there that the final number is valid?(Return to top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(Return to top) Typically, appraisers are hired by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Suffolk County or other areas?(Return to top) Gathering information is one of the primary functions of an appraiser. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a number of sources. To look up recent sales to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other public 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 gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(Return to top) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property 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.
How do I get ready for the appraiser?(Return to top) 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 status of its amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean?(Return to top) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Return to top) 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 entitled to a copy of the report - it's usually included 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 engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Return to top) Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
As a rule, the best ROI 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 were second, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.