Miles Hamrick Appraisal Services, Inc. has answers to "Frequently Asked Questions"
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Describe an appraisal
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Upon completion of the appraisal, how can I have a guarantee that the final number is accurate?
How are appraisers certified?
Who engages the services of appraisers?
Where does Miles Hamrick Appraisal Services, Inc. get the information used to estimate values?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
I want to get more for my house. Where should I spend money renovating?
An appraiser performs an evaluation that leads to an opinion of value.
There are three "common approaches to value" which assists the appraiser conclude this opinion or valuation.
The Cost Approach is one of the processes that real estate appraisers use to find the value of a property; it involves finding what the improvements would cost minus physical deterioration, adding the land value.
Another of the approaches is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close proximity which have recently sold.
The Sales Comparison Approach is commonly the most accurate and clearest indicator of 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 income generated by the property.
An appraiser forumlates an impartial and well supported determination of market value, in the support of real estate transactions.
Appraisers document their investigation in appraisal reports.
There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions.
A few other reasons for purchasing an report include:
If you need more information regarding the appraisal process, please click here.
- If you are applying for a loan.
- To lower your tax burden.
- To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
- To fight improperly assessed property taxes.
- If you need to settle an estate.
- To offer you a leg-up when purchasing a home.
- To find a likely sales price when listing your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every house.
- It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Appraisers do not do complete home inspections and are not home inspectors.
The point of a home inspection is to evaluate the structure of the property from bottom to rooftop.
Usually, a home inspection report will explain the amenities and the requirements of the house: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Simply put, it's night and day.
The CMA utilizes market trends to generate most of their business.
An appraisal relies on comparable sales that can be validated by records.
Also, the appraisal verifies other factors like condition, area and replacement costs.
All a CMA does is generate a "ball park figure."
An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person creating 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.
The appraisal is created by a licensed, certified professional who makes a living out of valuing properties.
Moreover, the appraiser is an independent voice, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the value of the home.
Every report must reflect a credible estimate of value and should clearly state the following:
For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report
- The client and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
- Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
- Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work considered while working up the job.
In the documentation of an appraisal, each appraiser must make sure of the following:
There are intense classroom and practical experience requirements that must be fulfilled in order to achieve the designation of "licensed appraiser" in North Carolina.
Likewise, appraisers must obey a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis implemented in the appraisal was suitable.
- Whether individually or collectively, there were no significant errors contained in the report, nor any relevant details left out.
- That appraisal services were not carried out in a careless or negligent manner.
- The final appraisal report was understandable, legitimate and defensible.
Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and practical experience.
Once an appraiser is licensed, he/she must then take continuing education courses so the license remains current. To see the specific requirements for any state click here.
Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan.
Attorneys and CPAs also hire appraisers for asset division and estate settlements.
One of the main tasks an appraiser must accomplish is to collect property data.
Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is received from a variety of places.
Local Multiple Listing Services (MLS) provide data on recently sold homes that could 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, 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 gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
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, be sure you're not overpaying by getting an independent appraisal.
If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly.
Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
PMI is an acronym for Private Mortgage Insurance.
This additional plan takes care of the lender if a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
The savings from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than Miles Hamrick Appraisal Services, Inc. when it comes to analyzing real estate. Contact us today.
The first step in most appraisals is the property inspection.
During this process, the appraiser 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.
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 landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access items like furnaces and water heaters.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
- A plot plan or survey of the house and land (if available).
- Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
- Information on "Homeowners Associations" or condominium covenants and fees.
- A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
- A list of "suggested" improvements if the property is to be appraised "as complete".
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
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 certainly 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.
This rule doesn't apply when a home owner engages an appraiser directly.
In these scenarios, the appraiser may define the purpose of the appraisal; 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.
A home's location - what city it is in and even what part of that city - is key to this popular question.
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
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, yielding 85%.
Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.