Bell Appraisal Services has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions) An appraisal report is an estimation allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find the value of a house; it involves concluding what the improvements would cost without physical deterioration, plus the land value. The Sales Comparison Approach involves searching for similar properties in the vicinity and figuring out the value based on making a comparison of those prior sales to the property being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of value for a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.
What does an appraiser do?(List of questions) An appraiser provides a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers show their professional conclusions in appraisal reports.
What are the reasons I would request a real estate appraisal?(List of questions) There are many reasons to get an appraisal from Bell Appraisal Services with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
What is the difference between an appraisal and a home inspection? (List of questions)The appraiser is not a home inspector and he or she does not do a full home inspection. A third-party home inspector will inspect the structure of the house, from the top to the bottom. The stereotypical home inspector's report will contain an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Honestly, they have nothing in common. The CMA relies on vague trends in the market. The appraisal is reliant on specific proven comparable sales. The appraisal report will also include area and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The person behind the report is frankly the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, California licensed professional who bases their livelihood on valuing homes in and around Kern County is behind the appraisal. Further, the appraiser is an independent party, with no vested 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? (List of questions)Each report must indicate a believable estimate of value and will document the following:
After completing the appraisal, what assurance is there that the final number is accurate?(List of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Typically, appraisers are called upon by mortgage lenders to render a value opinion on a home involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Bell Appraisal Services get the data used to estimate values in Kern County or other areas?(List of questions) One of the main activities of an appraiser is to assimilate property data. Data can be divided into 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. To look up recent sales to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents. 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 properties in the same market.
How can a licensed appraiser help me?(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 house, an appraisal will help you determine 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 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?(List of questions) PMI is short for for Private Mortgage Insurance. It protects the lender if a borrower doesn't pay on the loan and the value of the home 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?(List of questions) We begin with an inspection of the property. 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser 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) In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the report - 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.
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 stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(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.
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 are right up there with kitchens, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.