Spillane Appraisal Services,P.C. has answers to "Frequently Asked Questions"
What is an appraisal? What is an appraisal? (Go to list of questions)The process of writing an appraisal report deals with an inspection which leads to an opinion of value. The appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the three is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding comparable houses in the vicinity and figuring out the value based on comparing those prior sales to the home in question. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. The Income Approach is generally 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.Describe what an appraiser does (Go to list of questions)An appraiser offers a fair and credible determination of market value, in the support of real property transactions. Appraisers document their expert investigation in appraisal reports.What are the reasons someone would request your services? (Go to list of questions)There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)The appraiser is not a home inspector nor does he/she do a full home inspection. The point of a home inspection is to evaluate the structure of the property from foundation to top. Commonly, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.What is the difference between an appraisal and a comparative market analysis (CMA)? (Go to list of questions)Honestly, they have nothing in common. The CMA depends on vague trends in the market. Appraisals use similar sales which are valid resources. Location and construction costs are also precedent in an appraisal. 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.The person behind the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who bases a career on valuing homes in and around Franklin County is behind the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home. What can I expect to see in my appraisal report? (Go to list of questions)The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the appraisal is done, what assurance is there that the final number is legitimate? (Go to list of questions)In the documentation of an appraisal, each appraiser must ensure the following:
Who hires an appraiser? (Go to list of questions)Mortgage lenders are an appraiser's most likely customer, using 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 Spillane Appraisal Services,P.C. get the data used to estimate values in Franklin County or other areas? (Go to list of questions)Gathering information is one of the primary things an appraiser engages in. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.General data is collected from a variety of places. To find out about recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system. And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market. Why do I need a professional appraisal? (Go to 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. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Spillane Appraisal Services,P.C. is the best way to ensure assets are divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.My mortgage statement has an item on it for PMI? Can I get rid of that? (Go to list of questions)PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan protects the lender in case a borrower defaults on the loan and the value of the house is lower than what is owed 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.
Do you need anything from the homeowner in advance? (Go to list of questions)The first step in most appraisals is the home inspection. 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 amenities. Inside, make sure it is clutter free and that we can find our way to 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:
Define "Market Value" (Go to 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? (Go to list of questions)For mortgage transactions, the lender requests 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 appraisal - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.The exception to this rule is 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 use the appraisal for any purpose. Which home renovations add the most to the price? (Go to 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 homesNo matter where you go, however, renovating a kitchen is almost always a safe investment. 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%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size. |