PS Appraisals, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) An appraisal is an estimation that concludes with an opinion of value. This opinion or estimate is found by using a formal method that generally uses the three main "common approaches to value". One of the three 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 most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns making a comparison to similar houses nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. 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 produce.
What does an appraiser do?(Top) An appraiser forumlates a professional, unbiased opinion of market value, in the support of real estate exchanges. Appraisers illustate their professional investigation in appraisal reports.
What are the reasons someone would require a real estate appraisal?(Top) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an report include:
My agent performed a CMA for me. Is that the same as an appraisal?(Top) Honestly, they share nothing in common. The CMA utilizes market trends to generate most of their business. Appraisals use comparable sales which are verifiable resources. The appraisal report will also contain neighborhood and building values. 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.
The person creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, state licensed professional who made a career on valuing real estate in and around Riverside County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.
After completing the appraisal, how can I have assurance that the value conclusion is accurate?(Top) In communicating an appraisal report, each appraiser must make sure of the following:
Who do appraisers work for?(Top) Typically, appraisers are called upon by lenders to render a value opinion on a house involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Riverside County or other areas?(Top) Collecting data is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a variety of sources. To research recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents. Flood zone data is available from FEMA data outlets, 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?(Top) An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. When selling your house, an appraisal will help you determine 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. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Top) PMI is an acronym for Private Mortgage Insurance. This added policy guards the lender in case a borrower doesn't pay on the loan and the market price of the home is lower than what the borrower still owes 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?(Top) The first step in most appraisals is the property inspection. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its amenities. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, try 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 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 engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may state how the appraisal can be used; 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.
I want to get more for my house. Where should I spend money renovating?(Top) This really depends on where the home is. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.