James Potter Appraisal & Consulting has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) The method of producing an appraisal report consists of an investigation which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. One of the methods is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves searching for similar houses nearby and finding value based on making a comparison of those houses to the house being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is mainly 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 produce.
What does an appraiser do?(List of questions) An appraiser offers a professional, unbiased assessment of market value, often in the context of a real estate sale. Appraisers show their findings in appraisal reports.
What would cause me to request services from James Potter Appraisal & Consulting?(List of questions) There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
Is an appraisal the same as a home inspection? (List of questions)Appraisers do not do complete home inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the property, from the roof to the bottom. For the most part, a home inspection report will discuss the amenities and the requirements of the house: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Simply, they have nothing in common. The CMA depends on vague local market trends. The appraisal is reliant on specific valid comparable sales. Location and architectural values are also precedent in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
But the biggest difference is who's doing 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. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent voice, with no conditional interest in the property's value, unlike the real estate agent, who gets a commission based upon the price of the home.
What are the contents of an appraisal report? (List of questions)The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the assignment is done, how can I have a guarantee that the value indicated is legitimate?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for?(List of questions) Typically, appraisers are hired by mortgage lenders to render a value opinion on a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does James Potter Appraisal & Consulting get the data used to estimate values in Linn County or other areas?(List of questions) One of the most important things an appraiser does is to collect property data. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.
General data is gathered from a variety of sources. To find out about recent sales to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers often 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 product.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(List of questions) An appraisal is a worthwhile anytime the value of your home is pertinent to some financial decision. If you're selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from James Potter Appraisal & Consulting is the best way to ensure assets are split up fairly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(List of questions) PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental policy covers the lender if a borrower doesn't pay on the loan and the value of the house is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(List of questions) We begin with an inspection of the property. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can get to items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "Market Value"?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(List of questions) For mortgage transactions, the lender requests 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 allowed to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state how the appraisal can be used; 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.
Which home renovations add the most to the price?(List of questions) The added value of a particular amenity truly depends on the local market. 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 investment. 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%. 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.