Assessing Services Company, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The appraisal process is an estimation that leads to an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to come to the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the home, minus age and physical dilapidation, adding the land value. The Sales Comparison Approach involves searching for comparable houses nearby and discovering the value based on making a comparison of those prior sales to the home in question. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser offers a fair and credible determination of market value, to be used in making real estate transactions. Appraisers exhibit their findings in appraisal reports.
Why would someone request a real estate appraisal?(See list of FAQ's) There are many reasons to purchase an appraisal from Assessing Services Company, Inc. with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
What is the difference between an appraisal and a home inspection? (See list of FAQ's)Appraisers do not do complete home inspections and are not home inspectors. A third-party home inspector will inspect the structure of the house, from the roof to the foundation. The standard house inspector's report will contain an evaluation of the integrity of the property'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)?(See list of FAQ's) Frankly, it's like comparing sugar and saccharin. What the CMA depends on are superficial trends. The appraisal depends on similar verifiable comparable sales. The appraisal report will also contain neighborhood and construction costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
The person behind 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. A certified, state licensed professional who bases a career on valuing real estate in and around Oconto County is behind the appraisal. Moreover, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (See list of FAQ's)Every report must reflect a supported estimate of value and should identify the following:
After completing the report, what assurance is there that the final number is accurate?(See list of FAQ's) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who are an appraiser's customers?(See list of FAQ's) Mortgage lenders are an appraiser's typical client, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Assessing Services Company, Inc. get the data used to estimate values in Oconto County or other areas?(See list of FAQ's) Collecting data is one of the primary tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a many sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers often need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
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 do I need a professional appraisal?(See list of FAQ's) If you're involved in some sort of financial decision and the value of your home matters, you'll want a full appraisal. If you're selling your house, an appraisal assists you in setting the most appropriate price. When buying, be sure you're not overpaying by commissioning 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. Knowing its true value means you can make wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. This supplemental plan takes care of the lender in the event a borrower is unable to pay on the loan and the value of the property 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.
Should I do anything in advance of the appraisal appointment(See list of FAQ's) 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 condition of its amenities. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) 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 entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(See list of FAQ's) A home's location - what city it is in and even what part of that city - is key to this popular question. 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.
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 are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.