Mountain Front Appraisal Services has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured through a formal method that generally utilizes the three main "common approaches to value". One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with finding comparable homes in close proximity and discovering the value based on comparing those houses to the home being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.
What does an appraiser do?(Go to list of questions) An appraiser produces a fair and credible opinion of market value, in the support of real estate transactions. Appraisers show their analysis in appraisal reports.
Why would a person need your services?(Go to list of questions) There are many reasons to order an appraisal from Mountain Front Appraisal Services with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:
Is an appraisal the same as a home inspection? (Go to list of questions)The appraiser is not a home inspector and he or she does not do a complete home inspection. The point of a home inspection is to evaluate the structure of the house from foundation to top. Generally, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed 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?(Go to list of questions) Honestly, they have nothing in common. What the CMA relies upon are vague trends. Appraisals use comparable sales which are verifiable resources. The appraisal report will also contain location and construction costs. 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.
Who's behind the report is frankly the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome.
What are the contents of an appraisal report? (Go to 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:
Once the report has been completed, what assurance is there that the final number is valid?(Go to list of questions) In communicating an appraisal report, each appraiser must ensure the following:
Who hires an appraiser?(Go to list of questions) Mortgage lenders are an appraiser's typical client, 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 divorce and estate settlements.
Where does Mountain Front Appraisal Services get the data used to estimate values in Cascade County or other areas?(Go to list of questions) One of the most important things an appraiser does is to assimilate property data. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, 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?(Go to list of questions) An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. When selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, be sure you're not 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 home 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?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the loan balance. 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.
How do I get ready for the appraiser?(Go to list of questions) We begin 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 condition of its features. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can get to appliances like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Go to list of questions) In most real estate transactions, the appraisal is ordered by the lender. 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 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 hiring the appraiser for things outside securing a mortgage. 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.
How can I get the most ROI out of home improvements?(Go to list of questions) 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 were second, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.