Appraisal Services Group, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Top) The appraisal process is an estimation that generates an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the age and physical deterioration, adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to similar properties nearby. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the income generated by the property.
What does an appraiser do?(Top) An appraiser offers an impartial and well substantiated assessment of market value, in the support of real property exchanges. Appraisers demonstrate their conclusions in appraisal reports.
What are the reasons I would require a real estate appraisal?(Top) There are a lot of reasons to purchase an appraisal from Appraisal Services Group, Inc. with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Simply, they have nothing in common. What the CMA depends on are ill-defined trends. An appraisal relies on comparable sales that can be proven by records. The appraisal report will also contain neighborhood and building costs. The CMA will provide a non-specific 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. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, Tennessee licensed professional who has formed their livelihood on valuing real estate in and around Madison County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their value conclusion.
Once the report has been completed, how can I have confidence that the final number is accurate?(Top) In communicating an appraisal report, each appraiser must ensure the following:
Who hires an appraiser?(Top) Mortgage lenders are an appraiser's typical customer, using their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Appraisal Services Group, Inc. get the information used to estimate values in Madison County or other areas?(Top) Gathering data is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is gathered from a number of places. To look up recent sales to be used as "comps", an appraiser will 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. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties 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. For those selling a home, you'll want to determine a 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. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Appraisal Services Group, Inc. is the best way to ensure assets are split up fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Top) PMI is an acronym for Private Mortgage Insurance. This added plan covers the lender in the event a borrower is unable to pay on the loan and the value of the house is less than what the borrower still owes on 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.
Does the appraiser need anything from the homeowner in advance?(Top) We begin with an inspection of the home. During this process, we 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. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
What is "Market Value?"(Top) In real estate appraising, 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. 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 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.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Top) This really depends on where the home is. 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. 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 boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.