Douglas W. Brown & Associates, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) An appraiser performs an evaluation that generates an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or valuation. One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, minus age and physical deterioration, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which involves concluding a comparison to comparable houses nearby. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a house. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(List of questions) An appraiser produces a fair and credible determination of market value, to be used in making real estate transactions. Appraisers reveal the details of their investigation in appraisal reports.
What would cause me to request services from Douglas W. Brown & Associates, Inc.?(List of questions) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
How is an appraisal different than a home inspection? (List of questions)Home inspectors do not estimate an opinion of value and do not do appraisal reports. A third-party home inspector will judge the structure of the property, from the roof to the foundation. The archetypal house inspector's report will contain an evaluation of the integrity of the property'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) Simply put, it's apples and oranges. The CMA utilizes market trends to generate most of their business. Appraisals use comparable sales which are valid resources. Area and architectural costs are also important in an appraisal. 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.
Who's behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (List of questions)Each report must demonstrate a believable value opinion and will document the following:
After completing the appraisal, how can I have confidence that the final number is accurate?(List of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who engages the services of appraisers?(List of questions) Mortgage lenders are an appraiser's typical customer, using 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 hire appraisers for asset division and estate settlements.
Where does Douglas W. Brown & Associates, Inc. get the information used to estimate values in Clay County or other areas?(List of questions) Collecting information is one of the primary things an appraiser engages in. Data can be divided into Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a many sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.
How can a licensed appraiser help me?(List of questions) 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. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI stands for Private Mortgage Insurance. This supplemental policy takes care of the lender if a borrower is unable to pay on the loan and the value 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.
Does the appraiser need anything from the homeowner in advance?(List of questions) We start with an inspection of the home. During this process, we 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any bushes and move 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 expedite our work as well as ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to 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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may define 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, 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.
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, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.