Heritage Appraisal has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The procedure of writing an appraisal deals with an evaluation which forms an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to come to the estimation of market value. One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the methods is the Sales Comparison Approach - which concerns finding a comparison to other similar properties within a close proximity which have recently sold. Being the most common approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(Go to list of questions) An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers summarize their findings in appraisal reports.
What are the reasons someone would require your services?(Go to list of questions) There are a lot of reasons to purchase an appraisal from Heritage Appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Appraisers do not do complete house inspections and are not home inspectors. A third-party home inspector will inspect the structure of the property, from the roof to the bottom. Usually, a home inspection report will discuss the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(Go to list of questions) Honestly, they have nothing in common. The CMA relies on vague local market trends. An appraisal relies on comparable sales that can be validated by records. The appraisal report will also include location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents produce 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 made a career on valuing real estate in and around Iosco County creates the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, 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? (Go to list of questions)The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
After completing the report, what assurance is there that the value indicated is trustworthy?(Go to list of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who do appraisers work for?(Go to list of questions) Mortgage lenders are an appraiser's typical client, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Heritage Appraisal get the information used to estimate values in Iosco County or other areas?(Go to list of questions) One of the primary things an appraiser does is to gather property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is received from a many sources. To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.
What can a full appraisal do for me?(Go to list of questions) An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. 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 getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home 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?(Go to list of questions) PMI is short for for Private Mortgage Insurance. This added plan takes care of the lender in the event a borrower defaults on the loan and the value of the property is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from me in advance?(Go to list of questions) The first step in most appraisals is the property inspection. During this process, we 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, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What does "Market Value" mean?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Go to list of questions) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate 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.
Are some home improvements more worthwhile than others?(Go to list of questions) It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
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 were second, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.