Hickman Appraisal Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The process of performing an appraisal report consists of an evaluation which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. The Cost Approach is one of the methods that appraisers use to find the value of a property; it involves discerning what the improvements would cost less physical degradation, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with making a comparison to other similar nearby properties which have recently sold. Being the most common approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is generally used to determine the market value of a property based on what an investor would pay based on the capital produced by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser forumlates an unbiased and well justified opinion of market value, to be used in making real estate transactions. Appraisers document their findings in appraisal reports.
Why would a person request a real estate appraisal?(See list of FAQ's) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Appraisers do not do provide home inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and appliances of a home, from the top to the bottom. Usually, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible 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?(See list of FAQ's) Simply, they have nothing in common. The CMA utilizes market trends to conduct most of their business. Appraisals use comparable sales which are valid resources. Area and building prices are also precedent in an appraisal. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
Who's behind the report is hands down the biggest difference between a CMA and an appraisal. 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 has formed their livelihood on valuing properties in and around Cache County is behind the appraisal. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the price of the home.
What's in an appraisal report? (See list of FAQ's)The main point of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the appraisal, what guarantee is there that the final number is trustworthy?(See list of FAQ's) In the documentation of an appraisal, each appraiser must make sure of the following:
Who hires an appraiser?(See list of FAQ's) Typically, appraisers are hired by lenders to render a value opinion on property involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Cache County or other areas?(See list of FAQ's) Collecting information is one of the main things an appraiser engages in. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is gathered from a many sources. To research recent sales to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Appraisers routinely need 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 last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) An appraisal is a valuable tool anytime the value of your home is relevant to some financial decision. When selling your home, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Hickman Appraisal Inc. is the best way to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. This additional plan protects the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than the balance of the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
How do I get ready for the appraiser?(See list of FAQ's) 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 features. The best thing you can do to help is make sure we have 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 the appraiser can get to appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What does "Market Value" mean?(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) For mortgage transactions, the lender orders the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, 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.
I want to get more for my house. Where should I spend money renovating?(See list of FAQ's) Like all things real estate, this is dependent on a home's location. 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. 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 were second, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.