D Walk Appraisals has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The appraisal process is an evaluation that produces an opinion of value. The real estate appraiser will use a several "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a house; it involves finding what the improvements would cost without physical depreciation, adding the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which involves concluding a comparison to similar properties nearby. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a residential property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.
Describe what an appraiser does(Return to top) An appraiser forumlates a professional, unbiased determination of market value, often in the context of a real estate exchange. Appraisers demonstrate their investigation in appraisal reports.
What are the reasons I would request a real estate appraisal?(Return to top) There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
How is an appraisal different than a home inspection? (Return to top)Appraisers do not do provide house inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the house from bottom to top. The stereotypical property inspector's report will include an evaluation of the integrity of the property's heating system, 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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Return to top) Simply put, it's like comparing broadband and dial-up. The CMA depends on vague market trends. Appraisals use similar sales which are valid resources. The appraisal report will also contain location and construction values. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person behind the report is hands down the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (Return to top)The main objective 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:
After completing the appraisal, what guarantee is there that the value indicated is veritable?(Return to top) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who engages the services of appraisers?(Return to top) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does D Walk Appraisals get the information used to estimate values in Imperial County or other areas?(Return to top) One of the main things an appraiser does is to compile data. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.
General data is received from a many places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
What can a full appraisal do for me?(Return to top) An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. When selling your home, an appraisal helps you set the most appropriate price. 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 house is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.
What exactly is PMI and how can I get rid of it?(Return to top) PMI stands for Private Mortgage Insurance. This additional policy guards the lender in the event a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on the loan. 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?(Return to top) The first step in most appraisals is the property inspection. During this process, the appraiser will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
What is "Market Value?"(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Return to top) In most real estate transactions, the appraisal is ordered by the lender. 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 entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not allowed 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 scenarios, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Return to top) 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 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 were second, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.