Keim Appraisals has answers to "Frequently Asked Questions"
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Keim Appraisals is prepared to answer any concerns you might have about appraisals or real estate in Waterloo and Monroe County.
Feel free to contact us today.
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Define the term "Appraisal"
What does an appraiser do?
What would cause me to require services from Keim Appraisals?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the assignment has been completed, how can I have confidence that the value indicated is veritable?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Monroe County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?
Define the term "Appraisal" (See list of FAQ's)
An appraisal is an inspection allowing the appraiser to come to an opinion of value.
There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation.
One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, plus the land value.
The Sales Comparison Approach deals with searching for comparable houses in close proximity and figuring out the value based on making a comparison of those houses to the home in question.
The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residence.
The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do? (See list of FAQ's)
An appraiser generates an objective and well justified opinion of market value, to be used in making real estate transactions.
Appraisers exhibit their professional analysis in appraisal reports.
What would cause me to require services from Keim Appraisals? (See list of FAQ's)
There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions.
Other reasons for ordering an appraisal include:
- To receive a loan.
- To reduce your tax burden.
- To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
- To fight inflated property taxes.
- If you need to settle an estate.
- To provide you a negotiating tool when purchasing real estate.
- To find a reasonable sales price when selling your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every property.
- If you ever find yourself in a lawsuit.
For a more detailed description of the appraisal process click here.
Appraisers do not do complete home inspections and are not home inspectors.
A third-party home inspector will investigate the structure of the house, from the top to the bottom.
Generally, a home inspection report will discuss the amenities and the requirements 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, 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)? (See list of FAQ's)
Simply, they have nothing in common.
What the CMA relies upon are ill-defined trends.
Appraisals use comparable sales which are valid resources.
The appraisal report will also contain neighborhood and construction prices.
All a CMA does is generate 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 most significant difference between a CMA and an appraisal.
Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's.
A certified, state licensed professional who bases their livelihood on valuing real estate in and around Monroe County creates the appraisal.
Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.
The main objective of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
- The client and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- The type of value reported and a definition of the value reported.
- The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
- Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work considered to complete the assignment.
For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report
Once the assignment has been completed, how can I have confidence that the value indicated is veritable? (See list of FAQ's)
In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
- The appraisal used an appropriate analysis of the information.
- That major errors of omission or commission were not committed individually or collectively.
- That appraisal services were delivered in a careful and judicious fashion.
- That a believable, defensible appraisal report was conferred.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that prepare us to produce an unbiased opinion.
Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(See list of FAQ's)
Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and real world experience.
Once an appraiser is licensed, he or she is required to complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.
Who employs appraisers? (See list of FAQ's)
Typically, appraisers are called upon by mortgage lenders to render a value opinion on a house involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan.
Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the data used to estimate values in Monroe County or other areas? (See list of FAQ's)
Gathering information is one of the primary things an appraiser engages in.
Data can be split into Specific or General. Specific data is gathered 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 number of sources.
To look up recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service.
Tax records and other public documents verify actual sales prices in a market.
Appraisers routinely have to report when a property lies 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 past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser? (See list of FAQ's)
If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal.
If you're selling your home, an appraisal helps you set the most appropriate price.
If you're buying, it makes sure you don't overpay.
For those settling an estate or divorce, an appraisal from Keim Appraisals is the best way to ensure assets are divided 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 stands for Private Mortgage Insurance.
This additional plan covers the lender in the event a borrower defaults on the loan and the market price of the property 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.
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The amount you keep from dropping your PMI will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Keim Appraisals when it comes to analyzing real estate appreciation in Waterloo and Monroe County. Contact us today.
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How do I get ready for the appraiser? (See list of FAQ's)
We start 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.
The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any landscaping and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
- A survey or plot map of the property and building (if readily available).
- A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
- Title policy that lists encroachments or easements.
- Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
- Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
What does "Market Value" mean? (See list of FAQ's)
In real estate appraising, Market Value is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Who actually owns the appraisal report? (See list of FAQ's)
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 appraisal - it's usually included 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 situations, 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 use the appraisal for any purpose.
How can I get the most ROI out of home improvements? (See list of FAQ's)
It really depends on the 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.
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%.
Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.
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