Saunders Appraisal Service has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions) The process of producing an appraisal report deals with an estimation 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 approaches that appraisers use to find the value of a house; it involves concluding what the improvements would cost minus physical degradation, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.
Describe what an appraiser does(List of questions) An appraiser provides an unbiased and well supported opinion of market value, often in the context of a real estate exchange. Appraisers illustate their professional conclusions in appraisal reports.
Why would a person require services from Saunders Appraisal Service?(List of questions) There are many reasons to get an appraisal from Saunders Appraisal Service with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
What is the difference between an appraisal and a home inspection? (List of questions)Home inspectors do not provide an opinion of value and are not appraisers. The point of a home inspection is to evaluate the structure of the house from bottom to rooftop. The usual property inspector's report will include an evaluation of the integrity of the home's heating systems, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Simply put, it's apples and oranges. The CMA uses market trends to generate most of their business. The appraisal depends on similar verifiable comparable sales. In addition, the appraisal verifies other factors like condition, neighborhood and building prices. 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.
But the largest differentiator is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, Florida licensed professional who has formed a career on valuing real estate in and around Jackson County is behind the appraisal. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.
What does the appraisal report contain? (List of questions)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, you'll usually see the following:
After completing the appraisal, what assurance is there that the final number is veritable?(List of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who hires Saunders Appraisal Service(List of questions) Most of the time, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction - to make sure the property is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Jackson County or other areas?(List of questions) One of the main things an appraiser does is to compile data. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is received 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 routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why should I hire a licensed appraiser?(List of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; 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. 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?(List of questions) PMI is the common abbreviation for for Private Mortgage Insurance. PMI protects the lender in case a borrower defaults on the loan and the market price of the home is less than the loan balance. 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?(List of questions) We begin with an inspection of the property. 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean?(List of questions) 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?(List of questions) 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 appraisal - it's usually included with all the other closing documents - but is not entitled 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 situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(List of questions) 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
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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.