22 Claver Place Realty, Inc has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) An appraiser performs an evaluation that generates an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. One of the processes is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable houses nearby. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising homes is the Income Approach, which is generally used to figure the market value of a property based on what an investor would pay based on the income produced by the property.
What does an appraiser do?(See list of FAQ's) An appraiser forumlates a fair and credible opinion of market value, in the support of real property exchanges. Appraisers illustate their expert conclusions in appraisal reports.
What would cause me to need your services?(See list of FAQ's) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
What is the difference between an appraisal and a home inspection? (See list of FAQ's)The appraiser is not a home inspector nor does he/she do a full home inspection. The point of a home inspection is to investigate the structure of the house from basement to top. The general home inspector's report will include an evaluation of the condition of the home's heating systems, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(See list of FAQ's) To be honest, they have nothing in common. What the CMA relies upon are ill-defined trends. An appraisal is based on comparable sales that can be proven by records. In addition, the appraisal verifies other factors like condition, 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 biggest difference is who's doing the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who made a career on valuing properties in and around Kings County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their outcome.
What are the contents of an appraisal report? (See list of FAQ's)The main objective of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the report, what assurance is there that the final number is valid?(See list of FAQ's) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(See list of FAQ's) Mortgage lenders are an appraiser's most likely client, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Kings County or other areas?(See list of FAQ's) One of the main tasks an appraiser performs is to collect data. Data can be categorized 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 many places. To look up recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(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. If you're selling your house, an appraisal will help you determine 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 house is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. This supplementary plan covers the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal appointment(See list of FAQ's) The first step in most appraisals is the property 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 condition of its features. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.
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?(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) 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 certainly entitled to a copy of the appraisal - it's usually bundled 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 hiring the appraiser for things outside securing a mortgage. In these cases, 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 do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(See list of FAQ's) It really depends on the market. 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 move. 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.