4Appraisals LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal (See list of FAQ's)The appraisal process is an evaluation that leads to 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 methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the house, less the depreciation and physical deterioration, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which involves concluding a comparison to comparable houses close by. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The Income Approach is mainly 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 produce.
Describe what an appraiser does (See list of FAQ's)An appraiser provides a professional, unbiased determination of market value, in the support of real estate exchanges. Appraisers present their professional conclusions in appraisal reports.
What are the reasons someone would request a real estate appraisal? (See list of FAQ's)There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:
How is an appraiser different than a home inspector? (See list of FAQ's)The appraiser is not a home inspector and does not do a comprehensive home inspection. An inspection is a third-party evaluation of the available structure and electrical and mechanical systems of a home, from the top to the bottom. Usually, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, 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 visible structures.
Is an appraisal the same as a comparative market analysis(CMA)? (See list of FAQ's)Simply, they share nothing in common. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are valid resources. Location and construction costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the most significant factor is the person behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who has formed their livelihood on valuing real estate in and around Ector County is behind the appraisal. Moreover, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (See list of FAQ's)The main point 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, one will customarily see the following:
Upon completion of the report, what guarantee is there that the value conclusion is trustworthy? (See list of FAQ's)In the documentation of an appraisal, each appraiser must make sure of the following:
Who hires Hallmark Appraisals (See list of FAQ's)Most of the time, appraisers are called upon by mortgage lenders to estimate the value of a house involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Ector County or other areas? (See list of FAQ's)One of the most important tasks an appraiser performs is to collect property data. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is gathered from a variety of sources. To look up recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. 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 service.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
How can a licensed appraiser help me? (See list of FAQ's)If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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 home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it? (See list of FAQ's)PMI is short for for Private Mortgage Insurance. This additional policy guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is lower than the balance of 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 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 status of its amenities. Inside, pick up any clutter and make sure 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 exterior walls.
You can make things go faster and improve the quality of the appraisal report by having the following things on hand:
What is "Market Value?" (See list of FAQ's)In real estate appraising, 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 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may state 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.
How can I get the most ROI out of home improvements? (See list of FAQ's)The answer to this is different depending upon the location of the home. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
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 were second, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.