R Cohen Appraisal has answers to "Frequently Asked Questions"
||R Cohen Appraisal is prepared to handle any concerns you might have about appraisals in San Francisco and Marin Counties. Feel free to contact us today.
Describe an appraisal
What does an appraiser do?
What would cause me to request your services?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the appraisal has been completed, how can I have confidence that the final number is valid?
How difficult is it to become certified?
Who do appraisers work for?
Where does R Cohen Appraisal get the information used to estimate values?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?
Describe an appraisal (Go to list of questions)An appraisal report is an evaluation leading to an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves discerning what the improvements would cost minus physical depreciation, adding the land value. The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which involves concluding a comparison to comparable homes close by. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
What does an appraiser do? (Go to list of questions)An appraiser provides an impartial and well supported determination of market value, often in the context of a real estate exchange. Appraisers illustate their professional conclusions in appraisal reports.
What would cause me to request your services? (Go to list of questions)There are many 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:
Click here for a more extensive explanation of the process involved in getting an appraisal.
- If you are applying for a loan.
- To reduce your tax burden.
- To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
- To challenge improperly assessed property taxes.
- To deal with an estate.
- To provide you a leg-up when purchasing a home.
- To find the most probable property value when selling your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS require an appraisal on every home.
- It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Home inspectors do not estimate an opinion of value and are not appraisers. The purpose of a home inspection is to evaluate the structure of the home from foundation to attic. Usually, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)To be honest, they have nothing in common. What the CMA depends on are superficial trends. Appraisals use similar sales which are verifiable resources. Also, the appraisal checks other factors like condition, neighborhood and construction prices. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is the person doing the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, California licensed professional who bases a career on valuing homes in and around Marin County is behind the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the agent, whose income is tied to the price of the home.
Every appraisal should reflect a supported value opinion and must document the following:
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report
- The client and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
- Pertinent property attributes, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work considered when completing the appraisal.
Once the appraisal has been completed, how can I have confidence that the final number is valid? (Go to list of questions)In the documentation of an appraisal, each appraiser must ensure the following:
To become a state licensed appraiser, there are intense education requirements as well as experience that must be logged. In addition, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis utilized in the appraisal was proper.
- That crucial errors of omission or commission were not committed individually or collectively.
- That appraisal services were not rendered in a careless or negligent fashion.
- That a solid, supportable appraisal report was communicated.
(Go to list of questions)
Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he/she is required to take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.
Who do appraisers work for? (Go to list of questions)Mortgage lenders are an appraiser's most likely customer, using 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 asset division and estate settlements.
Where does R Cohen Appraisal get the information used to estimate values? (Go to list of questions)One of the primary tasks an appraiser performs is to collect property data. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a numerous places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And most importantly, the appraiser gathers 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 valuable tool whenever your home's value 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. Knowing its true value means you can make wise financial decisions.
What exactly is PMI and how can I get rid of it? (Go to list of questions)PMI stands for Private Mortgage Insurance. PMI protects the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. 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.
||Does your monthly house payment have a lineitem for PMI? Call R Cohen Appraisal today at 415 533-3135 or send us an e-mail. Documentation of your home's current value could save you thousands.
How do I get ready for the appraiser? (Go to list of questions)The first step in most appraisals is the home inspection. During this process, we 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. The best thing you can do to help is make 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 make it difficult to measure the structure. Indoors, make sure the appraiser can get to items like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
- Information on the latest purchase of the property in the last three years.
- A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
- Most recent real estate tax bill from Marin or San Francisco and or legal description of the property.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- A list of "proposed" improvements when the property is being appraised "as complete".
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:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Does the appraisal belong to the bank or the consumer? (Go to 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 appraisal - it's usually bundled with all the other closing documents - but is not allowed 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 state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements? (Go to list of questions)The added value of a particular amenity truly depends on the local market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
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 weren't far behind, returning 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.
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