Cornerstone Appraisals has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) The appraisal process is an evaluation that generates an opinion of value. This opinion or estimate is found by a formal method that commonly utilizes three "common approaches to value". The Cost Approach is one of the methods that real estate appraisers use to find the value of a home; it involves figuring what the improvements would cost less physical deterioration, adding the land value. The Sales Comparison Approach deals with finding comparable homes in close proximity and figuring out the value based on comparing those properties to the property being appraised. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to determine the market value of a property based on what an investor would pay based on the capital produced by the building.
Describe what an appraiser does(List of questions) An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers exhibit their analysis in appraisal reports.
What are the reasons a person would request a real estate appraisal?(List of questions) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
How is an appraisal different than a home inspection? (List of questions)Appraisers do not do provide residential property inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the house, from the roof to the bottom. The general property inspector's report will contain an evaluation of the integrity of the house's heating system, 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)?(List of questions) Honestly, they share nothing in common. The CMA utilizes market trends to conduct most of their business. The appraisal is based on similar valid comparable sales. Also, the appraisal checks other factors like condition, neighborhood and building costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is the person doing 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, New Mexico licensed professional who has formed a career on valuing real estate in and around Otero County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their outcome.
What are the contents of an appraisal report? (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:
Once the appraisal is done, how can I have a guarantee that the final number is veritable?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Mortgage lenders are an appraiser's most likely client, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Otero County or other areas?(List of questions) Compiling data is one of the primary occupations of an appraiser. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is gathered from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(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 will help you determine the most appropriate price. 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 home 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?(List of questions) PMI stands for Private Mortgage Insurance. This added plan takes care of the lender in case a borrower defaults on the loan and the value of the property is less than the loan balance. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Do you need anything from me in advance?(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 amenities. The best thing you can do to help is make 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. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.
You can make the inspection 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) 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 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.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state 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, 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 best ROI 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase 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.