Adams Appraisal Service, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The appraisal process is an estimation that produces an opinion of value. This opinion or estimate is figured using a formal method that generally uses three "common approaches to value". One of the methods is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding similar houses in the vicinity and discerning value based on comparing those homes to the property being appraised. Being the most common approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a home. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
What does an appraiser do?(Return to top) An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers exhibit their professional findings in appraisal reports.
What would cause me to need services from Adams Appraisal Service, Inc.?(Return to top) There are many reasons to get an appraisal from Adams Appraisal Service, Inc. with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:
How is an appraisal different than a home inspection? (Return to top)Home inspectors do not generate an opinion of value and are not appraisers. An inspection is a third-party evaluation of the livable structure and mechanical systems of a house, from the roof to the bottom. The usual house inspector's report will include 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.
My agent performed a CMA for me. Is that the same as an appraisal?(Return to top) To be blunt, it's like comparing sugar and saccharin. What the CMA relies upon are vague trends. An appraisal is based on comparable sales that can be validated by public record. Area and architectural prices are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the most significant factor 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 produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent party, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
What are the contents of an appraisal report? (Return to top)Every appraisal must indicate a supported estimate of value and will clearly state the following:
Once the appraisal has been delivered, how can I have certainty that the value indicated is veritable?(Return to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Return to top) Most of the time, appraisers are called upon by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does Adams Appraisal Service, Inc. get the data used to estimate values in Yuba County or other areas?(Return to top) One of the most important tasks an appraiser engages in is to assimilate data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is gathered from a variety of places. To look up recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. Tax records and other courthouse documents verify 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 service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
How can a licensed appraiser help me?(Return to top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal helps you set 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.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is short for for Private Mortgage Insurance. It guards the lender in the event a borrower doesn't pay on the loan and the market price of the property is lower 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.
How do I get ready for the appraiser?(Return to top) We begin with an inspection of the home. During this process, the appraiser 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. 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 (gates aren't locked, etc). Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can get to items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
What is "Market Value?"(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(Return to 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 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.
The exception to this rule is when a home owner engages an appraiser directly. 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 use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Return to top) This really depends on where the home is. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also help 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.