Appraisal Management Group has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) An appraiser provides an estimation that produces an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach involves searching for comparable homes nearby and figuring out the value based on comparing those homes to the home being appraised. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.
What does an appraiser do?(List of questions) An appraiser forumlates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers summarize their expert investigation in appraisal reports.
What would cause me to require your services?(List of questions) There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
How is an appraiser different than a home inspector? (List of questions)The appraiser is not a home inspector and does not do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the property from basement to top. The general home inspector's report will include an evaluation of the condition of the house'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.
My agent performed a CMA for me. Is that the same as an appraisal?(List of questions) To be blunt, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to create most of their business. An appraisal utilizes comparable sales that can be validated by public record. The appraisal report will also include neighborhood and building values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the biggest difference is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What's in an appraisal report? (List of questions)Every report should demonstrate a credible estimate of value and should clearly state the following:
Once the assignment has been completed, how can I have assurance that the value conclusion is accurate?(List of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(List of questions) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate 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 asset division and estate settlements.
Where does Appraisal Management Group get the data used to estimate values in Clackamas County or other areas?(List of questions) Collecting data is one of the primary functions of an appraiser. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is collected from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents. Appraisers often need to report when a property lies 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 assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(List of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. 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. For parties settling an estate or divorce, an appraisal from Appraisal Management Group is the best documentation to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
What exactly is PMI and how can I get rid of it?(List of questions) PMI stands for Private Mortgage Insurance. PMI guards the lender in the event a borrower defaults on the loan and the market price of the property 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.
Should I do anything in advance of the appraisal inspection(List of questions) The first step in most appraisals is the home inspection. During this process, we 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 landscaping so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
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 actually owns the appraisal report?(List of questions) 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 appraisal - 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 engaging the appraiser for things outside securing a mortgage. In these situations, 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.
How can I get the most ROI out of home improvements?(List of questions) This really depends on where the home is. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
As a rule, the best ROI 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.