Handy & Associates has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The procedure of creating an appraisal report consists of an estimation which leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves discerning what the improvements would cost without physical degradation, plus the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which involves figuring a comparison to comparable houses nearby. The Sales Comparison Approach is normally the most definitive and best indicator of value for a residence. The Income Approach is primarily used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
What does an appraiser do?(Go to list of questions) An appraiser forumlates an objective and well supported opinion of market value, often in the context of a real estate purchase. Appraisers show their professional investigation in appraisal reports.
Why would a person request your services?(Go to list of questions) There are many reasons to obtain an appraisal from Handy & Associates with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
Is an appraisal the same as a home inspection? (Go to list of questions)The appraiser is not a home inspector and he or she does not do a complete home inspection. The point of a home inspection is to evaluate the structure of the home from bottom to top. The usual house inspector's report will include an evaluation of the integrity 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.
My agent performed a CMA for me. Is that the same as an appraisal?(Go to list of questions) Frankly, they share nothing in common. What the CMA depends on are superficial trends. An appraisal is based on comparable sales that can be verified by records. The appraisal report will also include area and building costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the most significant factor is who's doing the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What's in an appraisal report? (Go to list of questions)Every report must demonstrate a credible estimate of value and should identify the following:
Upon completion of the appraisal, what guarantee is there that the value indicated is trustworthy?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for?(Go to list of questions) Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Contra Costa County or other areas?(Go to list of questions) One of the most important things an appraiser does is to collect data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a number of sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
Why do I need a professional appraisal?(Go to list of questions) If you're making any kind of financial decision and the value of your home matters, you'll want a full appraisal. If you're selling your home, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Handy & Associates is the best way to ensure assets are divided evenly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is short for for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the value of the home is less than what the borrower still owes on 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.
How do I get ready for the appraiser?(Go to list of questions) We begin with an inspection of the home. 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. On the home's interior, pick up any clutter and make sure we can get 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.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Go to 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 certainly entitled to a copy of the report - 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Go to list of questions) The added value of a particular amenity truly depends on the local market. 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
As a rule, the most value returned 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, an improvement that may not increase your value would be painting just for the sake of redecorating.