ApprasialCorps Inc. by Denise has answers to "Frequently Asked Questions"
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Define the term "Appraisal"
What does an appraiser do?
Why would someone request a real estate appraisal?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the report, what guarantee is there that the final number is veritable?
How are appraisers certified?
Who engages the services of appraisers?
Where does ApprasialCorps Inc. by Denise get the information used to estimate values in Hardee County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
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" (See list of FAQ's)
The method of performing an appraisal report deals with an evaluation which forms an opinion of value.
The appraiser must use a number of "approaches," typically three, to conclude the estimation of market value.
One of the methods 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.
The Sales Comparison Approach involves finding similar houses in close proximity and figuring out the value based on making a comparison of those prior sales to the home being appraised.
Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a property.
The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.
What does an appraiser do? (See list of FAQ's)
An appraiser forumlates a professional, unbiased determination of market value, in the support of real property transactions.
Appraisers present their conclusions in appraisal reports.
Why would someone request a real estate appraisal? (See list of FAQ's)
There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions.
A few other reasons for obtaining an report include:
If you need a more detailed explanation of the appraisal process, please click here.
- If you are applying for a loan.
- To lower your property taxes.
- To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
- To fight high property taxes.
- If you need to take care of an estate.
- To offer you an edge when purchasing real estate.
- To determine the most probable sales price when selling your home.
- To ensure parties are provided just compensation in eminient domain cases.
- Because a government agency such as the IRS requires it.
- If you ever find yourself in a civil case.
The appraiser is not a home inspector and he or she does not do a full home inspection.
The point of a home inspection is to investigate the structure of the home from foundation to rooftop.
The archetypal house inspector's report will include an evaluation of the condition of the property's heating systems, 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.
Is an appraisal the same as a comparative market analysis(CMA)? (See list of FAQ's)
To be blunt, it's like comparing Shakespeare to reality TV.
The CMA depends on indefinite trends in the market.
An appraisal is based on comparable sales that can be proven by records.
In addition, the appraisal verifies other factors like condition, neighborhood and replacement costs.
A CMA delivers a "ball park figure."
An appraisal delivers a defensible and carefully documented opinion of value.
The person behind the report is actually the most significant difference between a CMA and an appraisal.
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.
The appraisal is created by a licensed, certified professional who has made a career out of valuing properties.
Further, the appraiser is an independent party, with no vested interest in the value of a home, unlike the agent, whose income is tied to the price of the home.
Each appraisal must demonstrate a credible estimate of value and should clearly state the following:
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report
- Who engaged the appraiser and whose purposes the appraisal is to serve.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- The type of value reported and a definition of that value.
- The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
- Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
- Any 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 to complete the appraisal.
After completing the report, what guarantee is there that the final number is veritable? (See list of FAQ's)
In the documentation of an appraisal, each appraiser must ensure the following:
There are rigorous education and on the job experience requirements that must be met in order to achieve the designation of "licensed appraiser" in Florida.
Plus, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis contained in the appraisal was suitable.
- Whether individually or collectively, there were no significant errors contained in the report, nor any relevant details left out.
- That appraisal services were provided in a careful and cognizant manner.
- The final appraisal report was easy to explain, sound and not easily discredited.
(See list of FAQ's)
Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and experience working under a supervisory appraiser.
Once an appraiser is licensed, he or she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.
Who engages the services of appraisers? (See list of FAQ's)
Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure a home 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 ApprasialCorps Inc. by Denise get the information used to estimate values in Hardee County or other areas? (See list of FAQ's)
One of the most important things an appraiser does 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 specifics are gathered by the appraiser during an inspection.
General data is gathered from a numerous sources.
To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service.
Tax records and other public documents verify actual sales prices in a market.
Appraisers often have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, 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? (See list of FAQ's)
An appraisal is a worthwhile anytime your home's value is relevant to a financial decision.
When selling your home, an appraisal helps you set the most appropriate price.
If you're buying, it makes sure you don't overpay.
For parties settling an estate or divorce, an appraisal from ApprasialCorps Inc. by Denise is the best documentation to ensure assets are split up properly.
Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
What exactly is PMI and how can I get rid of it? (See list of FAQ's)
PMI is the common abbreviation for for Private Mortgage Insurance.
PMI protects the lender in case a borrower defaults on the loan and the value of the house is less than what the borrower still owes on 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.
Does your monthly house payment include a fee for PMI?Call ApprasialCorps Inc. by Denise today at 8637671990 or send us an e-mail. A current appraisal could save you thousands.
Does the appraiser need anything from the homeowner in advance? (See list of FAQ's)
We start with an inspection of the home.
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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can get to items 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:
- Written property agreements, such as a maintenance agreement for a shared driveway.
- Title policy that lists encroachments or easements.
- Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
- A list of any 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).
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
What is "Market Value?" (See list of FAQ's)
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? (See list of FAQ's)
For mortgage transactions, the lender orders the appraisal, either directly or through a third party.
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 report - 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.
This rule doesn't apply when a home owner engages an appraiser directly.
In these scenarios, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others? (See list of FAQ's)
The answer to this is different depending upon the location of the home.
installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move.
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, an improvement that may not increase your value would be painting just for the sake of redecorating.
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ApprasialCorps Inc. by Denise 2890 E. Main Street Wauchula, FL 33873
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