Fairway Appraisers has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) The procedure of producing an appraisal deals with an evaluation which leads to an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the property, less the depreciation and physical deterioration, plus the land value. Another of the processes is the Sales Comparison Approach - which involves discovering a comparison to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Top) An appraiser produces a professional, unbiased assessment of market value, often in the context of a real estate purchase. Appraisers summarize their investigation in appraisal reports.
Why would a person require services from Fairway Appraisers?(Top) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Frankly, it's like comparing sugar and saccharin. What the CMA relies upon are superficial trends. Appraisals use comparable sales which are verifiable resources. Location and building values are also a priority in an appraisal. 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.
But the biggest difference is who's behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, California licensed professional who has formed their livelihood on valuing properties in and around Riverside County is behind the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
Once the appraisal has been completed, how can I have assurance that the final number is legitimate?(Top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who are an appraiser's customers?(Top) Commonly, appraisers are called upon by mortgage lenders to render a value opinion on real estate involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does Fairway Appraisers get the information used to estimate values in Riverside County or other areas?(Top) Gathering data is one of the primary functions of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a number of sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(Top) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. If you're selling your home, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. 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 means you can make smart financial decisions.
What exactly is PMI and how can I get rid of it?(Top) PMI stands for Private Mortgage Insurance. This additional policy protects the lender in the event a borrower doesn't pay on the loan and the value of the property is lower than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal inspection(Top) The first step in most appraisals is the property inspection. 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. 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 bushes and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access 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?(Top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(Top) 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 entitled to a copy of the report - 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Top) It really depends on the market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
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%. On the contrary, something that may not add value would be painting just for the sake of redecorating.