Advance Real Estate Appraisals Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The method of performing an appraisal deals with an evaluation which forms an opinion of value. This opinion or estimate is found through a formal process that usually uses three "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the house, less the age and physical dilapidation, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns making a comparable analysis to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
Describe what an appraiser does(See list of FAQ's) An appraiser generates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers exhibit their analysis in appraisal reports.
What would cause me to need services from Advance Real Estate Appraisals Inc.?(See list of FAQ's) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Home inspectors do not produce an opinion of value and are not appraisers. The point of a home inspection is to investigate the structure of the property from foundation to rooftop. The general property inspector's report will contain an evaluation of the condition of the house's heating systems, 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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) To be blunt, it's like comparing Shakespeare to reality TV. The CMA depends on indistinct trends in the market. Appraisals use comparable sales which are verifiable resources. The appraisal report will also include area and building prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
The credentials of the person behind the report is actually the biggest 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. The appraisal is created 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 collect only a flat fee for work they perform, regardless of their value conclusion.
What can I expect to see in my appraisal report? (See list of FAQ's)The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, what assurance is there that the value conclusion is veritable?(See list of FAQ's) In communicating an appraisal report, each appraiser must ensure the following:
Who do appraisers work for?(See list of FAQ's) Most of the time, appraisers are employed by mortgage lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does Advance Real Estate Appraisals Inc. get the information used to estimate values in Miami-Dade County or other areas?(See list of FAQ's) Gathering data is one of the primary functions of an appraiser. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a many sources. To look up recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
Why do I need a professional appraisal?(See list of FAQ's) 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 those settling an estate or divorce, an appraisal from Advance Real Estate Appraisals Inc. is the best documentation to ensure assets are split up 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?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. PMI protects the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than what the borrower still owes on 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 home 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 features. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . 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 speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
Define "Market Value"(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 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 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.
The exception to this rule is when a home owner hires an appraiser directly. In these situations, 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 do whatever they want with the appraisal.
I want to get more for my house. Where should I spend money renovating?(See list of FAQ's) The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 were second, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.