Elite Appraisal has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The process of creating an appraisal consists of an inspection which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or estimate. One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, less the depreciation and physical dilapidation, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable properties close by. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residence. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.
Describe what an appraiser does(List of questions) An appraiser produces a fair and credible determination of market value, to be used in making real estate transactions. Appraisers illustate their expert findings in appraisal reports.
Why would a person need services from Elite Appraisal?(List of questions) There are many reasons to order an appraisal from Elite Appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (List of questions)Appraisers do not do perform house inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The stereotypical house inspector's report will contain an evaluation of the condition of the property'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.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Simply put, it's like comparing sugar and saccharin. The CMA utilizes market trends to generate most of their business. Appraisals use similar sales which are verifiable resources. The appraisal report will also contain area and building 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 actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who bases their livelihood on valuing homes in and around Dupage County creates the appraisal. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
What's in an appraisal report? (List of questions)Every report must reflect a credible value opinion and will clearly state the following:
After completing the appraisal, what guarantee is there that the value conclusion is valid?(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, requesting their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Dupage County or other areas?(List of questions) One of the most important tasks an appraiser engages in is to collect data. Data can be categorized 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 gathered from a variety of sources. To look up recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
What can a full appraisal do for me?(List of questions) An appraisal is a worthwhile anytime the value of your home is pertinent to some financial decision. When selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. 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. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(List of questions) PMI stands for Private Mortgage Insurance. PMI protects the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
How do I get ready for the appraiser?(List of questions) The first step in most appraisals is the property inspection. 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 we have easy access to the exterior of the house . Trim any shrubs and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What does "Market Value" mean?(List of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(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 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.
The exception to this rule is when a home owner hires an appraiser directly. In these scenarios, 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.
Which home renovations add the most to the price?(List of questions) The answer to this is different depending upon the location of the home. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.