Sullivan Appraisals has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal" (List of questions)The method of writing an appraisal deals with an investigation which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the property, minus age and physical dilapidation, plus the land value. The Sales Comparison Approach deals with finding similar homes nearby and finding value based on making a comparison of those homes to the property in question. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.
Describe what an appraiser does (List of questions)An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers document their investigation in appraisal reports.
Why would I need services from Sullivan Appraisals? (List of questions)There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an report include:
What is the difference between an appraisal and a home inspection? (List of questions)Home inspectors do not come to an opinion of value and are not appraisers. A third-party home inspector will investigate the structure of the home, from the top to the bottom. The general house inspector's report will contain an evaluation of the integrity of the house's heating systems, 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)? (List of questions)Frankly, it's like comparing sugar and saccharin. The CMA uses market trends to generate most of their business. An appraisal is based on comparable sales that can be proven by public record. Location and architectural prices are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is the person doing the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for assignments, regardless of their value conclusion.
What's in an appraisal report? (List of questions)Every appraisal should indicate a believable value opinion and will identify the following:
After completing the report, how can I have assurance that the value conclusion is veritable? (List of questions)In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers? (List of questions)Typically, appraisers are called upon by lenders to estimate the value of a house involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values? (List of questions)Gathering information is one of the primary activities of an appraiser. Data can be classified 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 during an inspection.
General data is received from a number of 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 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 assembles 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? (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 the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Sullivan Appraisals is the best documentation to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that? (List of questions)PMI is an acronym for Private Mortgage Insurance. This supplemental policy takes care of the lender in the event a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
Should I do anything in advance of the appraisal appointment (List of questions)We begin with an inspection of the home. During this process, I 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. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean? (List of questions)In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer? (List of questions)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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate 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.
Which home renovations add the most to the price? (List of questions)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're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want. There are numerous factors to consider...contact Sullivan Appraisals for a consultation. Every market is different.