Real Estate Appraisal Source has answers to "Top 18 of the most Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top)The procedure of writing an appraisal report deals with an evaluation which forms an opinion of value. The appraiser will use a few "approaches," typically three, to arrive at the estimation of market value. One of the processes 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. The Sales Comparison Approach involves finding comparable houses in the vicinity and discerning value based on making a comparison of those houses to the property being investigated. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a home. 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 capital produced by the property.
What does an appraiser do?(Top)An appraiser provides a fair and credible assessment of market value, often in the context of a real estate purchase. Appraisers document their findings in appraisal reports.
Why would I require services from Real Estate Appraisal Source?(Top)There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:
My agent performed a CMA for me. Is that the same as an appraisal?(Top)To be blunt, it's like comparing opera to country. What the CMA relies upon are vague trends. An appraisal is based on comparable sales that can be proven by public record. The appraisal report will also contain area and construction costs. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person creating the report is actually 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 makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
After completing the report, what guarantee is there that the value indicated is legitimate?(Top)In the documentation of an appraisal, each appraiser must make sure of the following:
Who hires an appraiser?(Top)Typically, appraisers are called upon 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 hire appraisers for asset division and estate settlements.
Where does Real Estate Appraisal Source get the data used to estimate values in Rock Island, Henry, Whiteside, Mercer, Scott, Clinton, Cedar, and Muscatine Counties or other areas?(Top)Gathering information is one of the main tasks an appraiser performs. 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 while on site.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. 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 most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.
Why do I need a professional appraisal?(Top)If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. 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. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Top)PMI is an acronym for Private Mortgage Insurance. PMI covers the lender in case a borrower is unable to pay on the loan and the value of the home is lower than the loan balance. 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.
Should I do anything in advance of the appraisal appointment(Top)We begin with an inspection of the property. 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 access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "Market Value"(Top)In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(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.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; 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?(Top)
The answer to this is different depending upon the location of the home. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
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