RHL APPRAISALS (732) 906-2202 has answers to "Frequently Asked Questions"
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RHL APPRAISALS (732) 906-2202 is willing to talk to you about any questions you might have about appraisals or real estate in Rocky Mount and Nash County.
Contact us today to talk about how we can help you with your specific valuation problems.
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Define the term "Appraisal"
What does an appraiser do?
Why would someone need a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Upon completion of the report, what assurance is there that the value indicated is legitimate?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Nash County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?
Define the term "Appraisal" (Back to top)
The procedure of writing an appraisal report consists of an estimation which forms an opinion of value.
The real estate appraiser will use a number of "approaches," typically three, to come to the estimation of market value.
One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, minus depreciation and physical dilapidation, plus the land value.
Another of the processes is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold.
Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house.
One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do? (Back to top)
An appraiser generates a professional, unbiased determination of market value, to be used in making real estate transactions.
Appraisers present their analysis in appraisal reports.
Why would someone need a real estate appraisal? (Back to top)
There are many reasons to obtain an appraisal from RHL APPRAISALS (732) 906-2202 with the usual reason being real estate and mortgage transactions.
A few other reasons for getting an appraisal include:
- If you are applying for a loan.
- If you would like to reduce your property tax burden.
- To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
- To challenge inflated property taxes.
- To settle an estate.
- To provide you an edge when purchasing a home.
- To find a reasonable price when putting your home on the market.
- To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
- Because an official agency such as the IRS requires it.
- If you ever find yourself in a civil case.
Click here for a more detailed explanation of the process involved in getting an appraisal.
Home inspectors do not provide an opinion of value and do not do appraisal reports.
An inspection is a third-party investigation of the available structure and systems of a property, from the top to the bottom.
The archetypal house 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.
What is the difference between an appraisal and a comparative market analysis (CMA)? (Back to top)
Simply, they have nothing in common.
What the CMA relies upon are vague trends.
The appraisal is reliant on specific verifiable comparable sales.
The appraisal report will also include neighborhood and building costs.
A CMA delivers a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is who's doing the report.
A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends.
A certified, state licensed professional who bases a career on valuing homes in and around Nash County is behind the appraisal.
Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome.
The main purpose 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:
- The client and other intended users.
- How the appraisal is supposed to be used.
- The reason for the assignment.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the value opinion.
- Pertinent property attributes, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work used while working up the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report
Upon completion of the report, what assurance is there that the value indicated is legitimate? (Back to top)
In the documentation of an appraisal, each appraiser must make sure of the following:
- The appraisal contained an apropos analysis of the information.
- That grave errors of omission or commission were not committed individually or collectively.
- That appraisal services were not conducted in a careless or negligent fashion.
- That a solid, supportable appraisal report was communicated.
To become a state licensed appraiser, there are strenuous education requirements as well as practical experience that must be attained - all with the end goal of being able to provide unbiased value opinions.
Plus, appraisers must abide by a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Back to top)
Regulations regarding licensing and certification vary from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and real world experience.
Once licensed, he or she must then take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.
Who are an appraiser's customers? (Back to top)
Commonly, appraisers are hired by mortgage lenders to estimate the value of property involved in a loan transaction.
Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the data used to estimate values in Nash County or other areas? (Back to top)
Compiling information is one of the primary things an appraiser does.
Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is collected from a number of 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 service.
And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.
What can a full appraisal do for me? (Back to top)
If you're making any kind of financial decision and the value of your home matters, you'll want a full appraisal.
For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; 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.
Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.
What exactly is PMI and how can I get rid of it? (Back to top)
PMI is short for for Private Mortgage Insurance.
PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes on the loan.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
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Is PMI something increasing your monthly house payment?Call RHL APPRAISALS (732) 906-2202 today at (732) 906-2202 or send us an e-mail. Documentation of your home's present value could save you thousands.
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How do I get ready for the appraiser? (Back to top)
We start with an inspection of the property.
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 find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
- Any information on the purchase of the property for the last three years.
- Information on any written private easements, such as a shared driveway with a neighbor.
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
- Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
- Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
What is "Market Value?" (Back to top)
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Does the appraisal belong to the bank or the consumer? (Back 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 included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner hires an appraiser directly.
In these scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others? (Back to top)
A home's location - what city it is in and even what part of that city - is key to this popular question.
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 weren't far behind, returning 85%.
Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.
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