Haley Appraisal,LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The method of performing an appraisal deals with an evaluation which forms an opinion of value. The appraiser will typically use a few "approaches," typically three, to draw up the estimation of market 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 minus physical degradation, adding the land value. The Sales Comparison Approach deals with searching for similar properties in close proximity and figuring out the value based on making a comparison of those homes to the property in question. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a home. 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 income a property produce.
What does an appraiser do?(Return to top) An appraiser generates an objective and well justified assessment of market value, to be used in making real estate transactions. Appraisers exhibit their professional conclusions in appraisal reports.
Why would I require a real estate appraisal?(Return to top) There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an report include:
My agent performed a CMA for me. Is that the same as an appraisal?(Return to top) Honestly, they have nothing in common. The CMA uses market trends to create most of their business. Appraisals use similar sales which are verifiable resources. The appraisal report will also include area and building values. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
Who's creating the report is frankly the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. 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 previously agreed upon sum for assignments, regardless of their value conclusion.
What can I expect to see in my appraisal report? (Return to top)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 has been completed, how can I have confidence that the final number is legitimate?(Return to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who employs appraisers?(Return to top) Most of the time, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction. 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 Polk County or other areas?(Return to top) Compiling data is one of the primary tasks an appraiser does. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is received from a variety of places. To find out about recently sold homes 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. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Return to top) An appraisal is a worthwhile anytime your home's value is relevant to a financial decision. If you're selling your house, an appraisal assists you in setting the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Haley Appraisal,LLC is the best documentation to ensure assets are split up fairly. Simply put, 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?(Return to top) PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan takes care of the lender if a borrower defaults on the loan and the market price of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
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 condition of its features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(Return to top) 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 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.
This rule doesn't apply when a home owner hires an appraiser directly. 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 stipulated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Return to top) 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 most value returned 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 weren't far behind, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.