1st Choice Valuation Services (207) 240-0991 has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Top) The procedure of producing an appraisal consists of an evaluation which forms an opinion of value. The appraiser will use a few "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the property, minus age and physical deterioration, plus the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable homes close by. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is generally used for finding 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(Top) An appraiser provides a fair and credible assessment of market value, in the support of real property transactions. Appraisers exhibit their expert conclusions in appraisal reports.
Why would someone request a real estate appraisal?(Top) There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Simply, they have nothing in common. The CMA uses market trends to create most of their business. Appraisals use comparable sales which are valid resources. Also, the appraisal verifies other factors like condition, neighborhood and building costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who bases their livelihood on valuing real estate in and around Franklin County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the price of the home.
Once the assignment has been completed, what guarantee is there that the value indicated is legitimate?(Top) In communicating an appraisal report, each appraiser must make sure of the following:
Who engages the services of appraisers?(Top) Typically, appraisers are employed by lenders to render a value opinion on a home involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Franklin County or other areas?(Top) One of the most important tasks an appraiser must accomplish is to compile data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a variety of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need 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 last but not least, the appraiser assimilates 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?(Top) If you're involved in some sort of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're 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. For people settling an estate or divorce, an appraisal from 1st Choice Valuation Services (207) 240-0991 is the best documentation to ensure assets are divided fairly. 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?(Top) PMI stands for Private Mortgage Insurance. This added plan covers the lender in the event a borrower defaults on the loan and the value of the property is lower than the loan balance. 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.
Should I do anything in advance of the appraisal appointment(Top) 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. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "Market Value"(Top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Top) 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 certainly 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 scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Top) It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
As a rule, the most value returned from renovating a home comes in the kitchen. 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%. On the contrary, work that may not add value would be painting just for the sake of redecorating.