Appraisal Services, LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) An appraisal report is a thought process leading to an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical deterioration, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.
Describe what an appraiser does(Top) An appraiser generates an impartial and well substantiated assessment of market value, often in the context of a real estate sale. Appraisers document their findings in appraisal reports.
Why would a person require services from Appraisal Services, LLC?(Top) There are a lot of reasons to order an appraisal from Appraisal Services, LLC with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Simply, they share nothing in common. What the CMA depends on are vague trends. The appraisal is reliant on similar proven comparable sales. The appraisal report will also contain neighborhood and construction values. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who has formed their livelihood on valuing properties in and around Fairfield County is behind the appraisal. 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 fee for work they perform, regardless of their outcome.
Once the report is done, what assurance is there that the final number is legitimate?(Top) In communicating an appraisal report, each appraiser must make sure of the following:
Who employs appraisers?(Top) Most of the time, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Fairfield County or other areas?(Top) Collecting information is one of the primary things an appraiser does. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.
General data is collected from a number of sources. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we use items in the assessor's office 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 system.
And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser?(Top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Appraisal Services, LLC is the best way to ensure assets are divided properly. A home 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?(Top) PMI is the common abbreviation for for Private Mortgage Insurance. This added policy protects the lender in case a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal inspection(Top) We begin with an inspection of the property. 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. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(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?(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 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 stipulate 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 use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(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
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%. On the contrary, something that may not add value would be painting just for the sake of redecorating.