Michelle E. Lyons, Appraiser has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(See list of FAQ's) The process of producing an appraisal report consists of an evaluation which forms an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or valuation. The Cost Approach is one of the approaches that appraisers use to find value; it involves figuring what the improvements would cost without physical deterioration, plus the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which deals with making a comparison to similar houses nearby. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser provides an impartial and well supported determination of market value, in the support of real estate exchanges. Appraisers show their professional analysis in appraisal reports.
Why would I require a real estate appraisal?(See list of FAQ's) There are many reasons to purchase an appraisal from Michelle E. Lyons, Appraiser with the most common reason being real estate and mortgage transactions. Some other reasons for getting an report include:
How is an appraisal different than a home inspection? (See list of FAQ's)Appraisers do not do provide home inspections and are not home inspectors. An inspection is a third-party evaluation of the livable structure and appliances of a home, from the top to the bottom. Commonly, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Simply put, it's apples and oranges. The CMA relies on indefinite local market trends. The appraisal is based on similar verifiable comparable sales. Area and construction prices are also precedent in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
The credentials of the person behind the report is actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (See list of FAQ's)Each appraisal must demonstrate a supported estimate of value and should clearly state the following:
Once the appraisal has been completed, how can I have assurance that the value conclusion 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:
Who do appraisers work for?(See list of FAQ's) Mortgage lenders are an appraiser's typical client, requesting their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does Michelle E. Lyons, Appraiser get the information used to estimate values in El Paso County or other areas?(See list of FAQ's) One of the most important tasks an appraiser must accomplish is to collect property data. Data can be divided into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often 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 creating appraisals for other properties in the same market.
What can a full appraisal do for me?(See list of FAQ's) If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. This added plan takes care of the lender in case a borrower is unable to pay on the loan and the value of the house is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal appointment(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. 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 shrubs and relocate 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.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
Define "Market Value"(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) 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 engaging 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 do whatever they want with the appraisal.
I want to get more for my house. Where should I spend money renovating?(See list of FAQ's) Like all things real estate, this is dependent on a home's location. 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
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.