1st Equity Appraisal Service has answers to "Frequently Asked Questions"
Describe an appraisal Describe an appraisal (Go to list of questions)The procedure of writing an appraisal report deals with an inspection which forms an opinion of value. The appraiser will typically use a few "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, minus depreciation and physical dilapidation, plus the land value. Another of the processes is the Sales Comparison Approach - which involves making a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a house. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to find the value of a property based on what an investor would pay based on the income produced by the property.What does an appraiser do? (Go to list of questions)An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers show their professional analysis in appraisal reports.What are the reasons a person would require services from 1st Equity Appraisal Service? (Go to list of questions)There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
How is an appraisal different than a home inspection? (Go to list of questions)Appraisers do not do complete home inspections and are not home inspectors. A third-party home inspector will inspect the structure of the house, from the top to the foundation. The stereotypical house inspector's report will include an evaluation of the condition of the house's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible 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)? (Go to list of questions)To be blunt, it's night and day. The CMA relies on indefinite local market trends. The appraisal is based on similar proven comparable sales. The appraisal report will also include location and construction costs. 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.The credentials of the person behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome. What are the contents of an appraisal report? (Go to list of questions)The main point of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
Once the assignment is done, what assurance is there that the final number is legitimate? (Go to list of questions)In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers? (Go to list of questions)Commonly, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.Where does an appraiser get the information used to estimate values in Prince William County or other areas? (Go to list of questions)Gathering data is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.General data is received from a number of places. To look up recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Appraisers often 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 product. And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market. Why should I hire a licensed appraiser? (Go to list of questions)If you're making some sort 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 determine 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. 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 house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.What exactly is PMI and how can I get rid of it? (Go to list of questions)PMI is an acronym for Private Mortgage Insurance. It guards the lender in case a borrower is unable to pay on the loan and the value of the house is lower 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.
Should I do anything in advance of the appraisal appointment (Go to 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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any bushes and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access items 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:
How does an appraiser define "Market Value"? (Go to 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? (Go to 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 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, 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 use the appraisal for any purpose. Which home renovations add the most to the price? (Go to 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, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.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 were second, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size. |
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