Appraisal Source of Virginia has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) An appraiser provides an estimation that generates an opinion of value. This opinion or estimate is concluded using a formal method that commonly uses three "common approaches to value". The Cost Approach is one of the approaches that appraisers use to find the value of a house; it involves figuring what the improvements would cost minus physical deterioration, plus the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable properties close by. Being the most popular approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a property. The Income Approach is primarily 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?(See list of FAQ's) An appraiser forumlates an impartial and well supported opinion of market value, to be used in making real estate transactions. Appraisers show their professional analysis in appraisal reports.
Why would a person require a real estate appraisal?(See list of FAQ's) There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Appraisers do not do complete residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a home, from the top to the bottom. Usually, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) Frankly, they share nothing in common. The CMA uses 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 values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
The credentials of the person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living 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 price of the home.
What are the contents of an appraisal report? (See list of FAQ's)Every report should reflect a credible value opinion and will clearly state the following:
Upon completion of the report, what guarantee is there that the final number is valid?(See list of FAQ's) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires Appraisal Source of Virginia(See list of FAQ's) Commonly, appraisers are called upon by mortgage lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Roanoke City County or other areas?(See list of FAQ's) One of the primary tasks an appraiser performs is to collect property data. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is gathered from a numerous places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To double-check actual sales prices, we look at tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser gathers 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?(See list of FAQ's) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. If you're selling your house, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. 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.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI stands for Private Mortgage Insurance. PMI protects the lender in case a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. 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?(See list of FAQ's) 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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
Define "Market Value"(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(See list of FAQ's) 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 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(See list of FAQ's) The answer to this is different depending upon the location of the home. For example, installing 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 were second, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.