Capital City Valuation has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) An appraiser provides an evaluation that produces an opinion of value. This opinion or estimate is figured through a formal process that usually utilizes the three main "common approaches to value". The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost minus physical degradation, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns discovering 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 accurate and best indicator of market value for a residence. 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 produce.
What does an appraiser do?(Go to list of questions) An appraiser generates a professional, unbiased opinion of market value, in the support of real property exchanges. Appraisers summarize their professional analysis in appraisal reports.
Why would I need your services?(Go to list of questions) There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. 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 complete residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a property, from the top to the foundation. The archetypal property inspector's report will include an evaluation of the integrity of the house's heating system, 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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Simply, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal is based on specific definite comparable sales. Also, the appraisal looks at other factors like condition, location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is who's doing the report. 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 makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (Go to list of questions)Each report must indicate a credible estimate of value and must identify the following:
Once the appraisal has been delivered, what guarantee is there that the final number is trustworthy?(Go to list of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(Go to list of questions) Commonly, appraisers are employed by mortgage lenders to estimate the value of real estate involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Capital City Valuation get the data used to estimate values in Sacramento County or other areas?(Go to list of questions) Collecting information is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at 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 gathers 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?(Go to list of questions) An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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. Knowing its true value is essential to making the right financial decisions.
What exactly is PMI and how can I get rid of it?(Go to list of questions) PMI stands for Private Mortgage Insurance. This supplementary plan protects the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal appointment(Go to list of questions) 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 status of its features. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to items 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:
How does an appraiser define "Market Value"?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(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 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.
The exception to this rule is when a home owner hires an appraiser directly. 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 do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Go to list of questions) It really depends on the market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.