Accurate Appraisals, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) An appraiser performs an estimation that leads to an opinion of value. The appraiser must use a number of "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a house; it involves discerning what the improvements would cost minus physical degradation, plus the land value. Easily the most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which deals with concluding a comparison to similar properties nearby. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Go to list of questions) An appraiser offers a fair and credible determination of market value, in the support of real property transactions. Appraisers reveal the details of their conclusions in appraisal reports.
Why would someone request your services?(Go to list of questions) There are many reasons to purchase an appraisal from Accurate Appraisals, Inc. with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
How is an appraiser different than a home inspector? (Go to list of questions)Appraisers do not do provide home inspections and are not home inspectors. A third-party home inspector will investigate the structure of the house, from the roof to the foundation. The standard house inspector's report will include an evaluation of the condition of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions) To be honest, they have nothing in common. What the CMA relies upon are superficial trends. An appraisal relies on comparable sales that can be proven by records. Area and building values are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the biggest difference is who's creating the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. 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 whereas the appraiser is bound by a code of ethics to accept a flat sum for work they perform, regardless of their outcome.
What are the contents of an appraisal report? (Go to list of questions)The main point of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, how can I have assurance that the value conclusion is valid?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, using their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the data used to estimate values in Cook County or other areas?(Go to list of questions) One of the main things an appraiser does is to assimilate property data. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.
General data is received from a variety of sources. To find out about recent sales to be used as "comps", we typically go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
What can a full appraisal do for me?(Go to 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. For those selling a home, you'll want to determine 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. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Accurate Appraisals, Inc. is the best documentation to ensure assets are divided evenly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in the event a borrower is unable to pay on the loan and the market price of the home 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 inspection(Go to list of questions) We start with an inspection of the home. 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. On the home's interior, pick up any clutter and make sure 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 outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
How does an appraiser define "Market Value"?(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(Go to list of questions) For mortgage transactions, the lender orders 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others?(Go to list of questions) 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 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 are right up there with kitchens, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.