Midwest Appraisal Associates, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The procedure of creating an appraisal report consists of an inspection which forms an opinion of value. The real estate appraiser must use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find the value of a property; it involves finding what the improvements would cost without physical deterioration, adding 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 proximity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of value for a house. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the income produced by the building.
Describe what an appraiser does(List of questions) An appraiser provides a professional, unbiased opinion of market value, often in the context of a real estate sale. Appraisers exhibit their conclusions in appraisal reports.
What are the reasons I would require your services?(List of questions) There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
How is an appraisal different than a home inspection? (List of questions)The appraiser is not a home inspector and does not do a complete home inspection. An inspection is a third-party investigation of the available structure and appliances of a home, from the roof to the bottom. Usually, a home inspection report will evaluate the amenities and the requirements of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(List of questions) Simply put, it's like comparing Shakespeare to reality TV. The CMA uses market trends to generate most of their business. An appraisal is based on comparable sales that can be verified by public record. In addition, the appraisal verifies other factors like condition, location and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person doing the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who bases a career on valuing real estate in and around Warren County creates the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (List of questions)Each report should demonstrate a believable value opinion and must clearly state the following:
After completing the appraisal, what guarantee is there that the final number is legitimate?(List of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who do appraisers work for?(List of questions) Typically, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Midwest Appraisal Associates, LLC get the data used to estimate values in Warren County or other areas?(List of questions) Gathering data is one of the main things an appraiser does. Data can be described as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is received from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely need 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 most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser?(List of questions) If you're involved in 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 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, you can avoid 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 house is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.
What exactly is PMI and how can I get rid of it?(List of questions) PMI is an acronym for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the market price of the property is lower 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?(List of questions) The first step in most appraisals is the home inspection. 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 bushes and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(List of questions) 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 report - it's usually bundled 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 hiring the appraiser for things outside securing a mortgage. 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 noted otherwise, the home owner can do whatever they want with the appraisal.
I want to get more for my house. Where should I spend money renovating?(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're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
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, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.