Chatham Appraisal Co has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The process of writing an appraisal consists of an inspection which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, less the age and physical dilapidation, adding the land value. The most common approach in figuring the value of a home is the Sales Comparison Approach which concerns concluding a comparison to similar homes nearby. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Return to top) An appraiser forumlates a professional, unbiased assessment of market value, in the support of real property transactions. Appraisers summarize their professional investigation in appraisal reports.
What are the reasons a person would need your services?(Return to top) There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Return to top) Simply, they share nothing in common. The CMA depends on vague local market trends. Appraisals use comparable sales which are verifiable resources. Location and architectural costs are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
Who's creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. 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 are the contents of an appraisal report? (Return to top)Each report should indicate a believable estimate of value and should identify the following:
Once the report is done, what assurance is there that the value indicated is accurate?(Return to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(Return to top) Typically, appraisers are hired by lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does Chatham Appraisal Co get the information used to estimate values in Chatham County or other areas?(Return to top) Gathering data is one of the main things an appraiser performs. Data can be divided 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 during an inspection.
General data is received from a number of sources. To find out about recently sold homes to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
What can a full appraisal do for me?(Return to top) 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. When selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, you can avoid 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.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is an acronym for Private Mortgage Insurance. This added plan protects the lender if a borrower defaults on the loan and the market price of the property is less than the balance of 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.
Do you need anything from me in advance?(Return to top) The first step in most appraisals is the property inspection. 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, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.
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?(Return to top) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(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 bundled with all the other closing documents - but is not allowed 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 stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Return to top) The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.