Jordan Appraisal has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The method of performing an appraisal consists of an inspection which leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or valuation. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, minus age and physical dilapidation, plus the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most popular approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a house. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
Describe what an appraiser does(List of questions) An appraiser generates a fair and credible opinion of market value, in the support of real estate exchanges. Appraisers illustate their professional investigation in appraisal reports.
Why would a person need services from Jordan Appraisal?(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 obtaining an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)Home inspectors do not estimate an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the home from foundation to top. For the most part, a home inspection report will explain the amenities and the requirements of the house: 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.
My agent performed a CMA for me. Is that the same as an appraisal?(List of questions) Frankly, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to create most of their business. The appraisal is reliant on similar proven comparable sales. Location and building prices are also a priority in an appraisal. 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 biggest difference is who's doing the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who made their livelihood on valuing real estate in and around Flathead County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their value conclusion.
What are the contents of an appraisal report? (List of questions)Each report must reflect a believable value opinion and will document the following:
After completing the appraisal, how can I have confidence that the value conclusion is veritable?(List of questions) In communicating an appraisal report, each appraiser must ensure the following:
Who engages the services of appraisers?(List of questions) Commonly, appraisers are called upon by lenders to estimate the value of a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Flathead County or other areas?(List of questions) Compiling data is one of the primary tasks an appraiser engages in. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a many places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To double-check 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 available from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(List of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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. Simply put, a house 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?(List of questions) PMI is short for for Private Mortgage Insurance. It covers the lender if a borrower is unable to pay on the loan and the value of the property is less 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.
How do I get ready for the appraiser?(List of questions) We start with an inspection of the home. 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 amenities. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
Define "Market Value"(List of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(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 entitled to a copy of the report - 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate 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.
How can I get the most ROI out of home improvements?(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.
As a rule, the most value returned 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, 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.