Corcoran Appraisal Group has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The procedure of writing an appraisal report consists of an evaluation which leads to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns figuring a comparison to similar houses nearby. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.
What does an appraiser do?(List of questions) An appraiser produces an unbiased and well supported opinion of market value, to be used in making real estate transactions. Appraisers exhibit their professional findings in appraisal reports.
Why would I request your services?(List of questions) There are a lot of reasons to get an appraisal from Corcoran Appraisal Group with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:
How is an appraiser different than a home inspector? (List of questions)Home inspectors do not produce an opinion of value and are not appraisers. A third-party home inspector will judge the structure of the property, from the roof to the foundation. Commonly, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(List of questions) Simply put, it's apples and oranges. The CMA depends on vague trends in the market. The appraisal depends on similar definite comparable sales. Area and building values are also a priority in an appraisal. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is who's doing the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce 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 of a home, unlike the agent, whose income is tied to the value of the home.
What does the appraisal report contain? (List of questions)The main purpose 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, one will customarily see the following:
Once the assignment is done, what assurance is there that the value indicated is veritable?(List of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Mortgage lenders are an appraiser's most likely client, requiring their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does Corcoran Appraisal Group get the data used to estimate values in New Hanover County or other areas?(List of questions) One of the main things an appraiser does is to assimilate property data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.
General data is gathered from a number of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
What can a full appraisal do for me?(List of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; 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 Corcoran Appraisal Group is the best way to ensure assets are divided evenly. Simply put, 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 an acronym for Private Mortgage Insurance. This supplemental plan guards the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. 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 me in advance?(List of questions) The first step in most appraisals is the property inspection. 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. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(List of questions) In real estate appraising, Market Value (as opposed to Fair 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. 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 bundled with all the other closing documents - but is not entitled 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 cases, the appraiser may state the purpose of the appraisal; 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.
Which home renovations add the most to the price?(List of questions) This really depends on where the home is. For example, installing 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, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.