(Return to top)An appraiser provides independent, licensed, professional services that lead to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to conclude the estimation of market value. One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with discovering a comparable analysis 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 residence. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
Home inspectors do not come to an opinion of value and are not appraisers. The purpose of a home inspection is to investigate the structure of the house from bottom to top. The general house inspector's report will contain an evaluation of the condition of the house'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.
In many states, real estate agents and brokers are required to have bias and be an advocate for a particular client. However, appraisers are required to be indpendent and non-biased. In litigation cases, appraisers are often viewed as a more appropriate expert witness because of the requirement to be an impartial, neutral, independent expert without favoring the interests of either party. Thus, the expert services of licensed appraisers are often found to be more credible and their services better suited to resolving a wide range of legal disputes.
Honestly, they share nothing in common. The agent preparer of the CMA is required to be an advocate for their client and the CMA is not required to meet official federal standards. Conversely, the appraisal must meet minimum federal and state standards, must be independent without bias and must be well documented. A CMA delivers a "ball park figure." An appraisal delivers a legally defensible and carefully documented official opinion of value.
The credentials of the person creating the report is hands down the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified or licensed professional Appraiser typically makes a career on valuing properties in and around a specific geographic location of the property. The appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike an agent - who gets a commission based upon the value of the home.
Every report should reflect a credible value opinion and will clearly state the following:
Who engaged the appraiser and other intended users.
The intended use of the report.
The appraisal's purpose.
The type of value reported and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered when completing the appraisal.
(Return to top)In communicating an appraisal report, each appraiser must ensure the following:
The appraisal contained an apropos analysis of the data.
Whether individually or collectively, there were no major errors contained in the appraisal, nor any material details left out.
That appraisal services were delivered in a careful and judicious fashion.
That a solid, substantiated appraisal report was communicated.
There are intense classroom and practical experience requirements that must be satisfied in order to become a licensed appraiser in Oklahoma. Plus, appraisers must abide by a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Return to top)Appraisers are hired by mortgage lenders to render a value opinion on a home or commercial property involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for a wide range of litigation, business, tax and asset valuation purposes. Appraisers are also commonly hired by consumers, Agents, insurance companies, REITs, investors and a wide range of clients interested in learnng the official value of real estate, as consultants or to help resolve disputes involving real estate.
(Return to top)One of the primary activities of an appraiser is to compile data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is received from a many sources. To research recent sales to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
(Return to top)If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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. Knowing its true value is essential to making the right financial decisions.
(Return to top)PMI is short for for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the market price of the house is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Did you have less than 20% to put down on your mortgage? Call One of the independent Experts associated with We Value Ammerica LLC today. You may be able to cancel your Private Mortgage Insurance payment.
(Return to top)We start 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. On the home's interior, pick up any clutter and make sure we can get 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.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
A survey or plot map of the property and building (if available).
Title policy that describes encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A bill for your most recent real estate taxes which should also contain a legal description of the property.
(Return to top)In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
(Return to top)In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - 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 and appraiser.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate how the appraisal can be used and who can use the appraisal; for litigation purposes, PMI removal, or estate planning or tax challenges, for example.
(Return to top)Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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%. Adding bedrooms and baths can also boost 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.