Winn Appraisal Services has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The method of writing an appraisal report consists of an inspection which leads to an opinion of value. This opinion or estimate is found by a formal process that typically utilizes three "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a property; it involves discerning what the improvements would cost without physical depreciation, adding the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparison to other similar nearby properties which have recently sold. Being the most popular approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.
What does an appraiser do?(List of questions) An appraiser provides an objective and well substantiated determination of market value, to be used in making real estate transactions. Appraisers demonstrate their professional analysis in appraisal reports.
Why would a person need services from Winn Appraisal Services?(List of questions) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:
How is an appraiser different than a home inspector? (List of questions)Home inspectors do not estimate an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the available structure and mechanical systems of a house, from the roof to the bottom. The archetypal property inspector's report will include an evaluation of the condition of the home's heating system, 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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) Frankly, they have nothing in common. What the CMA relies upon are superficial trends. An appraisal relies on comparable sales that can be verified by records. Also, the appraisal checks other factors like condition, area and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the most significant factor is the person doing the report. 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 has formed their livelihood on valuing homes in and around Washington County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their value conclusion.
What can I expect to see in my appraisal report? (List of questions)The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
Upon completion of the report, what assurance is there that the value conclusion is legitimate?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who engages the services of appraisers?(List of questions) Mortgage lenders are an appraiser's typical client, needing their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Winn Appraisal Services get the information used to estimate values in Washington County or other areas?(List of questions) Gathering information is one of the primary functions of an appraiser. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is received from a number of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. 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 system.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(List of questions) An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. When selling your home, an appraisal will help you determine 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 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?(List of questions) PMI is short for for Private Mortgage Insurance. This supplemental policy protects the lender in case a borrower is unable to pay on the loan and the value of the home 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.
Should I do anything in advance of the appraisal appointment(List of questions) The first step in most appraisals is the home 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. On the home's interior, 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 bushes so we can be free to get an accurate measurement of outside walls.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(List of questions) For mortgage transactions, the lender requests 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 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 hires an appraiser directly. In these scenarios, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(List of questions) The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
As a rule, the best ROI from renovating a home comes in the kitchen. 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 were second, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.