Central Arizona Real Estate Appraisers has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) The process of producing an appraisal report deals with an evaluation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation. The Cost Approach is one of the methods that appraisers use to find value; it involves figuring what the improvements would cost minus physical depreciation, plus the land value. The Sales Comparison Approach involves searching for similar properties in the vicinity and finding value based on comparing those homes to the property being investigated. Being the most popular approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a house. One of the least common approaches in appraising houses is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser produces a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers illustate their analysis in appraisal reports.
What would cause me to request a real estate appraisal?(Go to list of questions) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
How is an appraisal different than a home inspection? (Go to list of questions)Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the house from bottom to rooftop. The archetypal house inspector's report will include an evaluation of the condition of the house'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.
My agent performed a CMA for me. Is that the same as an appraisal?(Go to list of questions) To be honest, they have 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 records. Area and building values are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
Who's behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who has formed a career on valuing real estate in and around Maricopa County is behind the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.
What does the appraisal report contain? (Go to list of questions)The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the assignment is done, what assurance is there that the final number is valid?(Go to list of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who engages the services of appraisers?(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 retain the services of appraisers for asset division and estate settlements.
Where does Central Arizona Real Estate Appraisers get the information used to estimate values in Maricopa County or other areas?(Go to list of questions) Compiling information is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is gathered from a variety of places. To research recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we look at items in the assessor's office and other public documents. Appraisers routinely have 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 gathers general data from his or her past experience in creating appraisals for other houses in the same market.
What can a full appraisal do for me?(Go to list of questions) An appraisal is a valuable tool anytime the value of your home is relevant to a financial decision. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Central Arizona Real Estate Appraisers is the best documentation to ensure assets are split up evenly. A house 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 is short for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house 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(Go to list of questions) We start with an inspection of the property. 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 . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access items like furnaces and water heaters.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(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. 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 included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, 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.
How can I get the most ROI out of home improvements?(Go to list of questions) This really depends on where the home is. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.