Furr Appraisal Service has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Top) An appraisal is a thought process that concludes with an opinion of value. The appraiser will use a few "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the processes that appraisers use to find value; it involves finding what the improvements would cost less physical degradation, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves making a comparison to comparable homes close by. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Top) An appraiser offers a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers illustate their analysis in appraisal reports.
Why would a person require your services?(Top) There are many reasons to purchase an appraisal from Furr Appraisal Service with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
My agent performed a CMA for me. Is that the same as an appraisal?(Top) To be blunt, it's like comparing Shakespeare to reality TV. The CMA uses market trends to conduct most of their business. An appraisal relies on comparable sales that can be verified by public record. In addition, the appraisal looks at other factors like condition, neighborhood and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.
Once the report has been completed, what guarantee is there that the value conclusion is accurate?(Top) In communicating an appraisal report, each appraiser must ensure the following:
Who employs appraisers?(Top) Commonly, appraisers are employed by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Benton County or other areas?(Top) Compiling data is one of the main tasks an appraiser engages in. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is received from a number of places. To look up recent sales to be used as "comps", we often use the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
What can a full appraisal do for me?(Top) An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. 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. Knowing its true value means you can make informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Top) PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary plan guards the lender if a borrower doesn't pay on the loan and the value of the home is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal inspection(Top) We start 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 status 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 shrubs and relocate any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
Define "Market Value"(Top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(Top) 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 certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not allowed 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 cases, 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.
Are some home improvements more worthwhile than others?(Top) This really depends on where the home is. For example, 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 most value returned 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.