Mountain Residential Appraisal has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) An appraisal is an investigation allowing the appraiser to come to an opinion of value. This opinion or estimate is arrived at through a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves discerning what the improvements would cost without physical deterioration, adding the land value. The Sales Comparison Approach involves searching for comparable houses nearby and figuring out the value based on comparing those houses to the property being appraised. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential 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 money generated by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser provides an objective and well supported determination of market value, in the support of real estate exchanges. Appraisers exhibit their expert analysis in appraisal reports.
What are the reasons a person would need your services?(See list of FAQ's) There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:
What is the difference between an appraisal and a home inspection? (See list of FAQ's)Appraisers do not do perform home inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the house from bottom to attic. The stereotypical property inspector's report will include an evaluation of the condition 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.
Is an appraisal the same as a comparative market analysis(CMA)?(See list of FAQ's) Frankly, they have nothing in common. What the CMA depends on are superficial trends. The appraisal is reliant on specific valid comparable sales. The appraisal report will also contain neighborhood and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is who's behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who bases a career on valuing real estate in and around Dupage County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
What does the appraisal report contain? (See list of FAQ's)Each report must indicate a believable value opinion and should identify the following:
Once the assignment is done, what assurance is there that the final number is valid?(See list of FAQ's) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(See list of FAQ's) Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Mountain Residential Appraisal get the information used to estimate values in Dupage 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 categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a many places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(See list of FAQ's) An appraisal is a valuable tool anytime the value of your home is pertinent to some financial decision. For those selling a home, you'll want to determine the 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 commissioning 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 the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. It guards the lender if a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(See list of FAQ's) We begin 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 condition of its features. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and move any items that would make it difficult to 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:
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:
Who has rights to the appraisal report?(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 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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. 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 use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(See list of FAQ's) Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No 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, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.