Gutwein Appraisal Services, Inc has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) An appraisal is a thought process that concludes with an opinion of value. The real estate appraiser will use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves concluding what the improvements would cost less physical degradation, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparison to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
Describe what an appraiser does(See list of FAQ's) An appraiser provides a fair and credible determination of market value, to be used in making real estate transactions. Appraisers summarize their expert investigation in appraisal reports.
What would cause me to require your services?(See list of FAQ's) There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (See list of FAQ's)The appraiser is not a home inspector and he or she does not do a complete home inspection. The point of a home inspection is to evaluate the structure of the home from foundation to rooftop. Generally, a home inspection report will discuss the amenities and the necessities of the home: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) To be blunt, it's like comparing broadband and dial-up. What the CMA depends on are ill-defined trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include 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.
Who's behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. 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 sum for assignments, regardless of their value conclusion.
What can I expect to see in my appraisal report? (See list of FAQ's)Every report must reflect a credible value opinion and should document the following:
Upon completion of the appraisal, what assurance is there that the value conclusion is legitimate?(See list of FAQ's) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(See list of FAQ's) Mortgage lenders are an appraiser's typical customer, requesting their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Scotts Bluff County or other areas?(See list of FAQ's) One of the primary things an appraiser does is to collect property data. 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 documented by the appraiser during an inspection.
General data is received from a number of sources. To find out about recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
What can a full appraisal do for me?(See list of FAQ's) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Gutwein Appraisal Services, Inc is the best documentation to ensure assets are divided evenly. A house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) 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 lower than the balance of 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?(See list of FAQ's) We start with an inspection of the property. 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 status of its features. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
What does "Market Value" mean?(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) 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 appraisal - 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may define how the appraisal can be used; 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.
How can I get the most ROI out of home improvements?(See list of FAQ's) This really depends on where the home is. 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. 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 are right up there with kitchens, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.