R Cohen Appraisal has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The procedure of performing an appraisal report deals with an inspection which forms an opinion of value. This opinion or estimate is found by a formal method that typically uses the three main "common approaches to value". One of the three is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to similar homes close by. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. 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 produce.
What does an appraiser do?(Go to list of questions) An appraiser offers an objective and well supported determination of market value, to be used in making real estate transactions. Appraisers illustate their findings in appraisal reports.
Why would I request your services?(Go to list of questions) There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:
How is an appraisal different than a home inspection? (Go to list of questions)Appraisers do not do complete house inspections and are not home inspectors. A third-party home inspector will investigate the structure of the house, from the top to the bottom. The archetypal home inspector's report will contain an evaluation of the integrity of the property'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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Frankly, it's like comparing opera to country. What the CMA depends on are vague trends. The appraisal relies on specific verifiable comparable sales. Also, the appraisal looks at other factors like condition, neighborhood and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is who's behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.
What can I expect to see in my appraisal report? (Go to list of questions)The main purpose of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the assignment has been completed, how can I have certainty that the value conclusion is valid?(Go to list of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who hires R Cohen Appraisal(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. 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 in Marin County or other areas?(Go to list of questions) One of the primary activities of an appraiser is to compile 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 noted by the appraiser while on site.
General data is gathered from a variety of places. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers routinely 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 most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other properties 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. If you're selling your house, an appraisal helps you set the most appropriate price. 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. Knowing its true value means you can make informed financial decisions.
What exactly is PMI and how can I get rid of it?(Go to list of questions) PMI is an acronym for Private Mortgage Insurance. PMI guards the lender if a borrower is unable to pay on the loan and the value of the property 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(Go to list of questions) 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. 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 (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
You can make things go faster and improve the quality of the appraisal report by having the following things on hand:
What is "Market Value?"(Go to 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?(Go to list of questions) 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 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 situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Go to 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, 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 increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.