ESTHER-FLAK APPRAISAL CO has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured by a formal process that typically utilizes three "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus age and physical deterioration, adding the land value. The Sales Comparison Approach involves searching for similar houses nearby and discovering the value based on comparing those properties to the property being appraised. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a home. The Income Approach is generally used for determining 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 generates a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers demonstrate their expert analysis in appraisal reports.
What are the reasons someone would require a real estate appraisal?(Go to list of questions) There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
How is an appraiser different than a home inspector? (Go to list of questions)The appraiser is not a home inspector and does not do a full home inspection. A third-party home inspector will inspect the structure of the home, from the top to the bottom. Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible 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) Frankly, it's like comparing opera to country. The CMA utilizes market trends to generate most of their business. An appraisal relies on comparable sales that can be proven by records. Also, the appraisal looks at other factors like condition, area and replacement costs. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Michigan licensed professional who bases their livelihood on valuing real estate in and around Kent County creates the appraisal. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (Go to list of questions)Every appraisal must indicate a credible estimate of value and should document the following:
Once the assignment has been delivered, what assurance is there that the final number is veritable?(Go to list of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who do appraisers work for?(Go to list of questions) Most of the time, appraisers are employed by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Kent County or other areas?(Go to list of questions) One of the most important tasks an appraiser engages in is to collect data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is collected from a numerous places. To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often have to report when a property lies 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 assimilates general data from his or her past experience in doing assignments for other properties in the same market.
What can a full appraisal do for me?(Go to list of questions) If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. When 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 commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI stands for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property is lower 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.
How do I get ready for the appraiser?(Go to list of questions) The first step in most appraisals is the home inspection. 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. On the home's interior, pick up any clutter and make sure 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 exterior walls.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
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) 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 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 situations, the appraiser may state the purpose of the appraisal; 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?(Go to list of questions) 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 best ROI from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms were second, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.