Thomas & Associates has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions)The method of producing an appraisal consists of an inspection which forms an opinion of value. The appraiser will typically use a few "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves finding what the improvements would cost without physical degradation, adding the land value. The Sales Comparison Approach deals with finding comparable houses nearby and finding value based on comparing those houses to the house in question. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The Income Approach is generally used for finding 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(Go to list of questions)An appraiser produces a professional, unbiased opinion of market value, often in the context of a real estate sale. Appraisers exhibit their conclusions in appraisal reports.
What would cause me to request services from Thomas & Associates?(Go to list of questions)There are many reasons to order an appraisal from Thomas & Associates with the usual reason being real estate and mortgage transactions. Other reasons for ordering an report include:
Is an appraisal the same as a home inspection? (Go to list of questions)The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. The point of a home inspection is to investigate the structure of the property from bottom to attic. Usually, a home inspection report will evaluate the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions)Frankly, they share nothing in common. The CMA utilizes market trends to generate most of their business. An appraisal is based on comparable sales that can be validated by public record. The appraisal report will also include area and building costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the most significant factor is the person behind 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 makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their value conclusion.
What are the contents of an appraisal report? (Go to list of questions)Each report must indicate a believable estimate of value and will clearly state the following:
Once the assignment has been completed, what guarantee is there that the value conclusion is valid?(Go to list of questions)In the documentation of an appraisal, each appraiser must ensure the following:
Who hires an appraiser?(Go to list of questions)Commonly, appraisers are hired by mortgage lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Thomas & Associates get the data used to estimate values in Harrison County or other areas?(Go to list of questions)One of the main things an appraiser does is to gather 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 documented by the appraiser while on site.
General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(Go to list of questions)An appraisal is a worthwhile anytime the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. 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. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Go to list of questions)PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy guards the lender in case a borrower is unable to pay on the loan and the value 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(Go to list of questions)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 status of its amenities. On the home's interior, 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 outside 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?"(Go to list of questions)In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Go to list of questions)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 included with all the other closing documents - but is not allowed 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 situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Go to list of questions)Like all things real estate, this is dependent on a home's location. 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.
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 were second, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.