Acme Appraisals LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) An appraiser provides an estimation that generates an opinion of value. The real estate appraiser will use a few "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 age and physical dilapidation, plus the land value. The Sales Comparison Approach deals with searching for similar houses in close proximity and figuring out the value based on making a comparison of those homes to the home in question. Being the most popular approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to figure the market value of a property based on what an investor would pay based on the capital produced by the building.
What does an appraiser do?(Return to top) An appraiser provides an impartial and well supported assessment of market value, often in the context of a real estate sale. Appraisers reveal the details of their conclusions in appraisal reports.
Why would a person require services from Acme Appraisals LLC?(Return to top) There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (Return to top)The appraiser is not a home inspector and does not do a complete home inspection. A third-party home inspector will investigate the structure of the home, from the roof to the foundation. Commonly, a home inspection report will discuss the amenities and the necessities of the property: 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, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Return to top) Frankly, it's like comparing sugar and saccharin. The CMA utilizes market trends to conduct most of their business. An appraisal is based on comparable sales that can be validated by records. Also, the appraisal verifies other factors like condition, location and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the agent, who gets a commission based upon the value of the home.
What's in an appraisal report? (Return to top)Every report must demonstrate a supported value opinion and must identify the following:
Once the appraisal is done, what assurance is there that the final number is accurate?(Return to top) In the documentation of an appraisal, each appraiser must make sure of the following:
Who employs appraisers?(Return to top) Typically, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Desoto County or other areas?(Return to top) Compiling information is one of the primary things an appraiser does. Data can be classified 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 during an inspection.
General data is collected from a many places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
What can a full appraisal do for me?(Return to top) An appraisal is a valuable tool whenever your home's value is pertinent to some financial decision. If you're selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. 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. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Return to top) PMI is short for for Private Mortgage Insurance. This supplementary plan protects the lender in case a borrower defaults on the loan and the market price of the house is less 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.
How do I get ready for the appraiser?(Return to top) 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
How does an appraiser define "Market Value"?(Return to top) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Return to top) 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 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 hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may state 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 do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Return to top) The answer to this is different depending upon the location of the home. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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.