Skyline Appraisal Group has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Back to top) The method of producing an appraisal consists of an evaluation which forms an opinion of value. The real estate appraiser will typically use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the approaches that appraisers use to find the value of a home; it involves concluding what the improvements would cost less physical degradation, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of value for a house. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(Back to top) An appraiser forumlates a fair and credible assessment of market value, in the support of real estate exchanges. Appraisers reveal the details of their professional analysis in appraisal reports.
Why would I request a real estate appraisal?(Back to top) There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
How is an appraisal different than a home inspection? (Back to top)Appraisers do not do complete home inspections and are not home inspectors. A third-party home inspector will judge the structure of the house, from the roof to the bottom. The archetypal property inspector's report will include 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 accessible 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) To be blunt, it's night and day. The CMA depends on indistinct trends in the market. An appraisal is based on comparable sales that can be verified by records. Area and building costs are also important in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
Who's creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (Back to top)Each report should demonstrate a believable estimate of value and will identify the following:
Once the appraisal has been completed, how can I have assurance that the final number is trustworthy?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who do appraisers work for?(Back to top) Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does Skyline Appraisal Group get the data used to estimate values in Clark County or other areas?(Back to top) One of the primary things an appraiser does is to collect data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a numerous sources. To look up recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Back to top) 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 assists you in setting the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Skyline Appraisal Group is the best documentation to ensure assets are divided evenly. Simply put, a home 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 an acronym for Private Mortgage Insurance. PMI guards the lender if a borrower doesn't pay on the loan and the market price of the home is lower 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.
Should I do anything in advance of the appraisal appointment(Back to top) 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 relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "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) In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the report - it's usually included 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 engages 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 stated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Back to top) A home's location - what city it is in and even what part of that city - is key to this popular question. 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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.