Cranwood Appraisals has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) An appraiser provides an evaluation that generates an opinion of value. This opinion or estimate is figured through the use of a formal method that usually uses the three main "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the home, less the age and physical deterioration, adding the land value. The Sales Comparison Approach involves searching for comparable houses nearby and discovering the value based on making a comparison of those homes to the home in question. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to find the value of a property based on what an investor would pay based on the capital produced by the building.
Describe what an appraiser does(Back to top) An appraiser offers an unbiased and well justified opinion of market value, often in the context of a real estate sale. Appraisers illustate their expert conclusions in appraisal reports.
What would cause me to request a real estate appraisal?(Back to top) There are a lot of reasons to order an appraisal from Cranwood Appraisals with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (Back to top)The appraiser is not a home inspector nor does he/she do a complete home inspection. The point of a home inspection is to evaluate the structure of the home from bottom to top. The stereotypical house inspector's report will include an evaluation of the condition of the property's heating systems, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) Frankly, it's like comparing sugar and saccharin. The CMA depends on vague trends in the market. The appraisal is based on similar proven comparable sales. Area and building values 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 biggest difference is the person behind the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who has formed a career on valuing real estate in and around Manatee County creates the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (Back to top)The main objective 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:
Once the report has been completed, what guarantee is there that the final number is accurate?(Back to top) In the documentation of an appraisal, each appraiser must make sure of the following:
Who do appraisers work for?(Back to top) Typically, appraisers are hired by mortgage lenders to render a value opinion on a house involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Manatee County or other areas?(Back to top) One of the main tasks an appraiser performs is to assimilate property data. Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is gathered from a number of places. To look up recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. 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.
Why should I hire a licensed appraiser?(Back 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. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not 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.
What exactly is PMI and how can I get rid of it?(Back to top) PMI is an acronym for Private Mortgage Insurance. This added plan guards the lender in case a borrower doesn't pay on the loan and the value of the house 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(Back to top) The first step in most appraisals is the property 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 condition of its features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(Back 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?(Back 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 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may state 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 do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Back to top) This really depends on where the home is. 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
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 weren't far behind, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.