Valley Appraisals, Inc has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) An appraisal report is an investigation that concludes with an opinion of value. This opinion or estimate is arrived at through the use of a formal method that typically uses the three main "common approaches to value". One of the processes is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves searching for comparable houses in the vicinity and discovering the value based on making a comparison of those properties to the home in question. The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.
What does an appraiser do?(List of questions) An appraiser forumlates an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers show their expert investigation in appraisal reports.
What would cause me to need a real estate appraisal?(List of questions) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
How is an appraiser different than a home inspector? (List of questions)Home inspectors do not figure out an opinion of value and do not do appraisal reports. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a house, from the top to the foundation. The usual 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)?(List of questions) Honestly, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal relies on specific proven comparable sales. Location and construction costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Colorado licensed professional who made a career on valuing properties in and around Pitkin County creates the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (List of questions)Each report must reflect a believable value opinion and must document the following:
Once the assignment is done, how can I have assurance that the final number is accurate?(List of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(List of questions) Most of the time, appraisers are employed by lenders to estimate the value of a home involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Valley Appraisals, Inc get the information used to estimate values in Pitkin County or other areas?(List of questions) Gathering data is one of the main tasks an appraiser does. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
What can a full appraisal do for 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. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. 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. 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 is an acronym for Private Mortgage Insurance. This added policy guards the lender in case a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(List of questions) We start 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 status of its features. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
Define "Market Value"(List of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(List of questions) 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 report - it's usually included 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate 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.
I want to get more for my house. Where should I spend money renovating?(List of questions) This really depends on where the home is. 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 an oddball for your neighborhood in terms of size.