Appraisal Pro Northwest has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal" (List of questions)The procedure of creating an appraisal consists of an evaluation which forms an opinion of value. The real estate appraiser must use a few "approaches," typically three, to come to the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus age and physical deterioration, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar nearby properties which have recently sold. 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. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
What does an appraiser do? (List of questions)An appraiser generates a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers demonstrate their expert conclusions in appraisal reports.
Why would I require your services? (List of questions)There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
How is an appraisal different than a home inspection? (List of questions)Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to evaluate the structure of the property from bottom to top. For the most part, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity 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)? (List of questions)Frankly, they have nothing in common. What the CMA depends on are vague trends. The appraisal relies on similar proven comparable sales. The appraisal report will also contain area and construction prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person doing the report. Real estate agents, who may not have a true grasp 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. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.
What does the appraisal report contain? (List of questions)Each appraisal must demonstrate a supported value opinion and will identify the following:
Once the report is done, how can I have certainty that the value indicated is veritable? (List of questions)In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for? (List of questions)Commonly, appraisers are called upon by lenders to render a value opinion on property involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Appraisal Pro Northwest get the data used to estimate values in San Juan County or other areas? (List of questions)Collecting data is one of the main tasks an appraiser does. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is gathered from a number of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.
And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses 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 some financial decision. When selling your home, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Appraisal Pro Northwest is the best documentation to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
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What exactly is PMI and how can I get rid of it? (List of questions)PMI stands for Private Mortgage Insurance. It guards the lender in case a borrower doesn't pay on the loan and the value of the property 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.
How do I get ready for the appraiser? (List of questions)We begin 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 condition of its features. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean? (List of questions)In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report? (List of questions)For mortgage transactions, the lender requests 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 certainly 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.
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 stated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements? (List of questions)This really depends on where the home is. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, something that may not add value would be painting just for the sake of redecorating.