Real Property Appraisals, LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The procedure of performing an appraisal report consists of an investigation which forms an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. One of the three is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which deals with making a comparison to comparable homes nearby. Being the most common approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a residential property. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the value of a property based on what an investor would pay based on the capital produced by the property.
Describe what an appraiser does(Go to list of questions) An appraiser offers a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers exhibit their expert conclusions in appraisal reports.
What would cause me to need services from Real Property Appraisals, LLC?(Go to list of questions) There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for getting an report include:
How is an appraisal different than a home inspection? (Go to list of questions)The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. The point of a home inspection is to investigate the structure of the property from bottom to top. Commonly, a home inspection report will discuss the amenities and the requirements 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, visible 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?(Go to list of questions) Simply, they have nothing in common. The CMA depends on vague market trends. The appraisal depends on similar definite comparable sales. In addition, the appraisal checks other factors like condition, area and construction prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, Washington licensed professional who has formed their livelihood on valuing properties in and around Kittitas County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their value conclusion.
What can I expect to see in my appraisal report? (Go to list of questions)The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the appraisal has been completed, how can I have a guarantee that the value conclusion is veritable?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(Go to list of questions) Mortgage lenders are an appraiser's typical client, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Kittitas County or other areas?(Go to list of questions) One of the most important tasks an appraiser performs is to collect data. Data can be divided into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is gathered from a number of places. To research recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents. 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 service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
Why do I need a professional appraisal?(Go to list of questions) An appraisal is a valuable tool whenever the value of your home is relevant to a financial decision. For those selling a home, you'll want to determine a 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. When buying, be sure you're not overpaying by getting an independent appraisal. 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. Knowing its true value means you can make smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is short for for Private Mortgage Insurance. It guards the lender if a borrower doesn't pay on the loan and the market price of the property 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.
Do you need anything from me in advance?(Go to list of questions) We start with an inspection of the home. 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 features. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Go to list of questions) 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 report - 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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these scenarios, 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 use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(Go to list of questions) Like all things real estate, this is dependent on a home's location. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
As a rule, the best ROI 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, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.