Raleigh-Durham Appraisals has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions)An appraisal report is an investigation that concludes with an opinion of value. The appraiser will use a few "approaches," typically three, to conclude the estimation of market value. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical dilapidation, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with making a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is normally the most accurate and clearest indicator of value for a house. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(List of questions)An appraiser forumlates a fair and credible opinion of market value, in the support of real property transactions. Appraisers reveal the details of their expert investigation in appraisal reports.
What are the reasons I would need a real estate appraisal?(List of questions)There are a lot of reasons to get an appraisal from Raleigh-Durham Appraisals with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
Is an appraisal the same as a home inspection? (List of questions)Home inspectors do not provide an opinion of value and are not appraisers. A third-party home inspector will investigate the structure of the property, from the top to the foundation. For the most part, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, 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 other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions)Simply put, it's like comparing opera to country. The CMA relies on indefinite local market trends. An appraisal is based on comparable sales that can be proven by public record. The appraisal report will also contain neighborhood and building values. 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 biggest difference 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, state licensed professional who has formed a career on valuing homes in and around Wake County is behind the appraisal. 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 previously agreed upon fee for assignments, regardless of their value conclusion.
What does the appraisal report contain? (List of questions)Each appraisal must demonstrate a credible estimate of value and must identify the following:
Once the report is done, how can I have assurance that the value conclusion is trustworthy?(List of questions)In communicating an appraisal report, each appraiser must make sure of the following:
Who hires Raleigh-Durham Appraisals(List of questions)Commonly, appraisers are employed by mortgage lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Wake County or other areas?(List of questions)One of the most important activities of an appraiser is to collect property data. Data can be classified 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 could 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 service.
And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
What can a full appraisal do for me?(List of questions)An appraisal is a worthwhile whenever the value of your home is relevant to a financial decision. When selling your home, 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 house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions)PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from me in advance?(List of questions)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 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 (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to items like furnaces and water heaters.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean?(List of questions)In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(List of questions)For mortgage transactions, the lender requests 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 report - 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 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.
Which home renovations add the most to the price?(List of questions)It really depends on the market. 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. 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 weren't far behind, yielding 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 an oddball for your neighborhood in terms of size.