Cross Appraisal Service has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) An appraisal is an inspection allowing the appraiser to come to an opinion of value. The real estate appraiser will use a several "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves concluding what the improvements would cost less physical degradation, adding the land value. The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which deals with concluding a comparison to comparable homes nearby. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a house. The Income Approach is primarily used for determining 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.
Describe what an appraiser does(Back to top) An appraiser offers a fair and credible determination of market value, often in the context of a real estate purchase. Appraisers illustate their expert analysis in appraisal reports.
What would cause me to require your services?(Back to top) There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
Is an appraisal the same as a home inspection? (Back to top)The appraiser is not a home inspector and does not do a comprehensive home inspection. The point of a home inspection is to evaluate the structure of the house from bottom to attic. Usually, a home inspection report will evaluate the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(Back to top) To be honest, they share nothing in common. What the CMA depends on are ill-defined trends. An appraisal is based on comparable sales that can be verified by public record. Area and construction prices are also a priority in an appraisal. 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.
The credentials of the person behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who has formed their livelihood on valuing real estate in and around Coos 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 value conclusion.
What's in an appraisal report? (Back to top)The main objective of an appraisal document 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:
After completing the report, how can I have assurance that the value indicated is trustworthy?(Back to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who do appraisers work for?(Back to top) Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Coos County or other areas?(Back to top) One of the primary tasks an appraiser performs is to compile property data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is received from a variety of places. To look up recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely 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 service.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(Back to top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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. Simply put, a home 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?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental plan guards the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the loan balance. 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 inspection(Back to top) 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 amenities. Inside, make sure it is clutter free and that we can get 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.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
Define "Market Value"(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Back to top) For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 appraisal - 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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Back to top) It really depends on the market. 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.
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%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.