S & S Real Estate Appraisal Service has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) The process of producing an appraisal consists of an evaluation which leads to an opinion of value. The real estate appraiser will use a several "approaches," typically three, to arrive at the estimation of market value. One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding 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 similar properties close by. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residence. 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 capital a property would bring in.
What does an appraiser do?(See list of FAQ's) An appraiser generates a professional, unbiased opinion of market value, in the support of real property exchanges. Appraisers exhibit their expert analysis in appraisal reports.
Why would a person require a real estate appraisal?(See list of FAQ's) There are a lot of reasons to obtain an appraisal from S & S Real Estate Appraisal Service with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
Is an appraisal the same as a home inspection? (See list of FAQ's)The appraiser is not a home inspector and he or she does not do a complete home inspection. An inspection is a third-party investigation of the accessible structure and mechanical systems of a property, from the roof to the bottom. The archetypal house inspector's report will include an evaluation of the condition of the property's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Honestly, they have nothing in common. The CMA utilizes market trends to generate most of their business. The appraisal is reliant on specific definite comparable sales. Area and building costs are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The person creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Wisconsin licensed professional who made their livelihood on valuing real estate in and around Racine County creates the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.
What's in an appraisal report? (See list of FAQ's)Each appraisal should demonstrate a believable estimate of value and should clearly state the following:
Once the assignment has been delivered, how can I have confidence 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 an appraiser?(See list of FAQ's) Mortgage lenders are an appraiser's typical customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the data used to estimate values in Racine County or other areas?(See list of FAQ's) Gathering data is one of the primary roles of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a number of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often have 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 last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.
What can a full appraisal do for me?(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 home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from S & S Real Estate Appraisal Service is the best documentation to ensure assets are divided properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI stands for Private Mortgage Insurance. It takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the home is less 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) We start with an inspection of the home. During this process, we 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What does "Market Value" mean?(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. 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 engages an appraiser directly. In these scenarios, the appraiser may stipulate 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 use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(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. 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%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.