Jordan-Appraisal has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The method of writing an appraisal report deals with an estimation which leads to an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to arrive at the estimation of market value. One of the processes 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 methods is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Usually, the Sales Comparison Approach is the most accurate 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 figure the value of a property based on what an investor would pay based on the capital produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser forumlates a professional, unbiased opinion of market value, often in the context of a real estate purchase. Appraisers document their analysis in appraisal reports.
What would cause me to require your services?(Go to list of questions) There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (Go to list of questions)Appraisers do not do complete home inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the property from foundation to rooftop. The usual house inspector's report will include an evaluation of the condition of the house'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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) To be honest, they have nothing in common. What the CMA depends on are superficial trends. Appraisals use comparable sales which are valid resources. The appraisal report will also include neighborhood and construction costs. 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.
The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Illinois licensed professional who made their livelihood on valuing properties in and around Champaign County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome.
What can I expect to see in my appraisal report? (Go to list of questions)The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the report, what assurance is there that the value indicated is accurate?(Go to list of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(Go to list of questions) Most of the time, appraisers are employed by mortgage lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Jordan-Appraisal get the data used to estimate values in Champaign County or other areas?(Go to list of questions) Compiling data is one of the main things an appraiser performs. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a variety of sources. To find out about recent sales to be used as "comps", an appraiser will typically go to 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 available from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
What can a full appraisal do for me?(Go to 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. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. 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. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it?(Go to list of questions) PMI stands for Private Mortgage Insurance. PMI guards the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than what is owed 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.
Should I do anything in advance of the appraisal appointment(Go to list of questions) The first step in most appraisals is the property inspection. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any shrubs and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.
To help expedite our work plus ensure a more accurate report, try if possible to have the following items:
Define "Market Value"(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Go to list of questions) For mortgage transactions, the lender orders 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 appraisal - 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may define the purpose of the appraisal; 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.
I want to get more for my house. Where should I spend money renovating?(Go to 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
As a rule, the most value returned from renovating a home comes in the kitchen. 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, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.