Westhill Appraisal has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The appraisal process is an evaluation that generates an opinion of value. This opinion or estimate is discerned through the use of a formal method that typically uses the three main "common approaches to value". One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the house, less the age and physical deterioration, adding the land value. The Sales Comparison Approach involves finding similar homes in close proximity and discerning value based on making a comparison of those prior sales to the home in question. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a house. 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?(Go to list of questions) An appraiser provides an unbiased and well justified determination of market value, to be used in making real estate transactions. Appraisers summarize their professional findings in appraisal reports.
What would cause me to require services from Westhill Appraisal?(Go to list of questions) There are a lot of reasons to get an appraisal from Westhill Appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
How is an appraiser different than a home inspector? (Go to list of questions)Home inspectors do not produce an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the home from basement to attic. For the most part, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions) To be honest, they share nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use similar sales which are verifiable resources. Area and building values are also important in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person behind the report is frankly 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. A certified, Maryland licensed professional who bases their livelihood on valuing real estate in and around Howard County creates the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.
What does the appraisal report contain? (Go to list of questions)Every appraisal must reflect a credible value opinion and must identify the following:
Upon completion of the appraisal, what assurance is there that the value indicated is valid?(Go to list of questions) In communicating an appraisal report, each appraiser must ensure the following:
Who engages the services of appraisers?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, using their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Howard County or other areas?(Go to list of questions) One of the main tasks an appraiser performs is to assimilate data. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is collected from a many places. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.
How can a licensed appraiser help 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 determine a 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 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. PMI covers the lender if a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan. 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.
How do I get ready for the appraiser?(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. 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 bushes and move any items that would get in our way while we measure the structure. Indoors, make sure we can get to items 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:
What is "Market Value?"(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) In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is entitled to a copy of the report - it's usually bundled with all the other closing documents - but is not entitled 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 scenarios, the appraiser may stipulate the purpose of the appraisal; 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.
How can I get the most ROI out of home improvements?(Go to list of questions) This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
As a rule, the best ROI 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.