Alliance Appraisal Group, LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) An appraiser provides an evaluation that leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the depreciation and physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which concerns finding a comparison to other similar properties within a close vicinity which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(Back to top) An appraiser provides a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers present their analysis in appraisal reports.
What would cause me to request services from Alliance Appraisal Group, LLC?(Back to top) There are a lot of reasons to purchase an appraisal from Alliance Appraisal Group, LLC with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:
How is an appraiser different than a home inspector? (Back to top)Home inspectors do not produce an opinion of value and are not appraisers. The purpose of a home inspection is to evaluate the structure of the house from bottom to top. The usual home inspector's report will contain an evaluation of the condition of the home'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.
My agent performed a CMA for me. Is that the same as an appraisal?(Back to top) Honestly, they have nothing in common. What the CMA depends on are vague trends. The appraisal is reliant on similar verifiable comparable sales. The appraisal report will also include location and building values. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. 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. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.
What are the contents of an appraisal report? (Back to top)The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Upon completion of the report, how can I have a guarantee that the value indicated is valid?(Back to top) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who engages the services of appraisers?(Back to top) Commonly, appraisers are called upon by lenders to render a value opinion on real estate involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the data used to estimate values in Hendricks County or other areas?(Back to top) One of the main activities of an appraiser is to gather property data. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is gathered from a many places. To find out about recent sales to be used as "comps", we typically use the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
How can a licensed appraiser help me?(Back to top) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. 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.
What exactly is PMI and how can I get rid of it?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. This added policy protects the lender in the event a borrower is unable to pay 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?(Back to top) The first step in most appraisals is the home 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
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?"(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(Back to top) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - 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 engaging 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 use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Back to top) It really depends on the market. 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 weren't far behind, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.