Fidelity Appraisal has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) An appraisal report is an evaluation that concludes with an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to come to the estimation of market 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, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a home. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(List of questions) An appraiser provides a fair and credible assessment of market value, in the support of real estate exchanges. Appraisers demonstrate their investigation in appraisal reports.
Why would I request a real estate appraisal?(List of questions) There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
Is an appraisal the same as a home inspection? (List of questions)The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will judge the structure of the house, from the roof to the bottom. The standard house inspector's report will contain an evaluation of the condition of the property's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) To be honest, they share nothing in common. What the CMA relies upon are vague trends. The appraisal depends on similar definite comparable sales. Also, the appraisal looks at other factors like condition, location and replacement 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 behind the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their value conclusion.
What are the contents of an appraisal report? (List of questions)The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
Upon completion of the report, what guarantee is there that the value indicated is trustworthy?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(List of questions) Mortgage lenders are an appraiser's typical client, requesting their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Clark County or other areas?(List of questions) Collecting information 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 specific data are noted by the appraiser while on site.
General data is collected from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers often have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
How can a licensed appraiser help me?(List of questions) An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. When selling your home, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. 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?(List of questions) PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy guards the lender in the event a borrower is unable to pay on the loan and the market price of the home is lower than the balance of the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
Should I do anything in advance of the appraisal inspection(List of questions) We start with an inspection of the home. 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. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
You can make things go faster and improve the quality 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 (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(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 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 situations, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(List of questions) The added value of a particular amenity truly depends on the local market. 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
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 weren't far behind, yielding 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.