Edgewater Appraisal Services has answers to "Frequently Asked Questions"
||Edgewater Appraisal Services is always more than happy to address any questions you might have about appraisals in Plymouth County.
Contact us today to learn how we can help you with your specific valuation problems.
Describe an appraisal
Describe what an appraiser does
Why would I request your services?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the report is done, how can I have a guarantee that the value conclusion is veritable?
How difficult is it to become certified?
Who employs appraisers?
Where does Edgewater Appraisal Services get the data used to estimate values in Plymouth County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?
Describe an appraisal (Return to top)
An appraisal report is an inspection allowing the appraiser to come to an opinion of value.
This opinion or estimate is discerned through a formal method that commonly uses the three main "common approaches to value".
One of the processes 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 most common approach in finding the value of a home is the Sales Comparison Approach which deals with figuring a comparison to comparable houses close by.
The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a home.
The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
Describe what an appraiser does (Return to top)
An appraiser offers a fair and credible assessment of market value, often in the context of a real estate sale.
Appraisers show their analysis in appraisal reports.
Why would I request your services? (Return to top)
There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions.
Some other reasons for purchasing an report include:
Click here for a more detailed explanation of the process of getting an appraisal.
- If you are applying for a loan.
- If you would like to reduce your property tax burden.
- To demonstrate a homeowner's acquired equity and remove insurance.
- To challenge improperly assessed property taxes.
- To deal with an estate.
- To give you a leg-up when purchasing real estate.
- To determine the most probable property value when listing your home.
- To ensure parties are provided just compensation in eminient domain cases.
- Government agencies such as the IRS require an appraisal on every house.
- If you are ever involved in a lawsuit.
Home inspectors do not come to an opinion of value and are not appraisers.
The purpose of a home inspection is to investigate the structure of the property from basement to rooftop.
For the most part, a home inspection report will discuss the amenities and the requirements 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)? (Return to top)
To be blunt, it's like comparing sugar and saccharin.
The CMA utilizes market trends to conduct most of their business.
The appraisal is based on similar valid comparable sales.
The appraisal report will also include location and construction prices.
All a CMA does is generate a "ball park figure."
Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person creating the report is actually the biggest 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.
The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties.
Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.
The main point of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report
- Who engaged the appraiser and other intended users.
- The intended use of the report.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
- Relevant property characteristics, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- What was included in the process of completing the job.
Once the report is done, how can I have a guarantee that the value conclusion is veritable? (Return to top)
In communicating an appraisal report, each appraiser must make sure of the following:
To become a state licensed appraiser, there are education requirements as well as on the jobexperience that must be logged.
Likewise, appraisers must obey a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis implemented in the appraisal was appropriate.
- That crucial errors of omission or commission were not committed individually or collectively.
- That appraisal services were not conducted in a careless or negligent fashion.
- That a trustworthy, substantiated appraisal report was communicated.
(Return to top)
Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and real world experience.
Once licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.
Who employs appraisers? (Return to top)
Most of the time, appraisers are employed by lenders to estimate the value of property involved in a loan transaction.
Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Edgewater Appraisal Services get the data used to estimate values in Plymouth County or other areas? (Return to top)
Collecting data is one of the primary occupations of an appraiser.
Data can be described as either 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 collected from a variety of sources.
To research recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service.
Tax records and other public documents verify actual sales prices in a market.
Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser? (Return to top)
If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal.
When selling your house, 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.
Simply put, 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? (Return to top)
PMI is the common abbreviation for for Private Mortgage Insurance.
PMI takes care of the lender in case a borrower defaults on the loan and the value of the home is less than the loan balance.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Did you have less than 20% to put down on your mortgage? Call Edgewater Appraisal Services today at 7817386687 to see if you can get rid of your Private Mortgage Insurance premium.
How do I get ready for the appraiser? (Return to top)
We begin with an inspection of the property.
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.
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 exterior walls.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
- Any information on the purchase of the property for the last three years.
- A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
- Most recent real estate tax bill from Plymouth and or legal description of the property.
- A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
- A list of "proposed" improvements when the property is being appraised "as complete".
What does "Market Value" mean? (Return to top)
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? (Return to top)
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 entitled to a copy of the report - it's usually bundled 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 hires an appraiser directly.
In these cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated 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? (Return to top)
This really depends on where the home is.
adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
As a rule, the best ROI from renovating a home comes in the kitchen.
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%.
Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.
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