An appraiser provides an independent, impartial, objective opinion of real property value which reflects all pertinent market evidence, to be used in making real estate decisions. Appraisers typically present their formal analysis in the form of a written appraisal report. However, the appraisal practice includes valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review, or appraisal consulting. Most states require that real estate appraisers are state licensed or certified. The state licensed or certified appraiser is trained to render an independent, impartial, and objective opinion based upon extensive education and experience requirements. To become licensed or certified, appraisers must fulfill rigorous education and experience requirements. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
Why would I need an appraisal?
There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
Loans or Refinancing.
Establish Replacement Cost for Insurance
Taxes Matters
Settle an Estate or Estate Planning
Provide a Negotiating Tool When Buying Real Estate
Determine a Reasonable Price When Selling Real Estate
Protect Your Rights in a Condemnation Case/Government Taking
Divorce or Other Legal Matters
Relocating Employees
REO/Foreclosures
Again, these are just a few examples of why a person might need an appraisal. Each individual’s circumstances may be different.
Why would I need a professional appraiser?
Anytime the value of your home or other real property is being used to make a significant financial decision, an appraisal can be a very useful tool in assisting you with these decisions. If you're selling your home, an appraisal helps you set the most appropriate asking price. If you're buying, it can assist you so that you don't overpay. If you're engaged in an estate settlement or divorce, it can be very useful in dividing property fairly. A home is often the single, largest financial asset anybody owns. Assistance from a professional real estate appraiser and the opinion of value that a professional can provide means you can the supportable financial decisions.
How do I get ready appraisal?
The first step in most appraisals is gathering specific data and the viewing of the property. During this process, the appraiser will come to your home and measure it, determine the layout of the rooms inside, confirm aspects of the home's general condition, and take several photos of your home. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house and any other buildings on the property. Make sure that the appraiser can easily access all interior rooms, and such items as furnaces and water heaters, etc. It is also important to remember that there is access to basement areas, crawl spaces, etc.
The following Items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
A survey of the house and property.
A deed or title report showing the legal description.
A recent tax bill.
A list of personal property to be sold with the house if applicable.
A copy of the original plans.
A list of major improvements and the time frame in which these improvements have been
completed.
How soon can the Appraiser tell me the opinion of value?
Simply put, an appraiser is on a fact finding mission. The first step in most appraisals is the viewing of the property. During this process, the appraiser will come to your home and measure it, determine the layout of the rooms inside, confirm aspects of the home's general condition, and take several photos of your home. Next, much research must be compiled. Gathering data is one of the primary roles of an appraiser. The first step in most appraisals is gathering specific data and the viewing of the property. The appraiser must typically go through the “appraisal process” before an opinion of value can be determined.
Where does the Appraiser get the information used to estimate value?
Gathering data is one of the primary roles of an appraiser. Data can be divided into Specific and General. Specific data is gathered about the property itself. Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection. General data is gathered from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data sources. An appraiser also gathers general data from his or her past experience in creating appraisals for other properties in the same market/neighborhood area.
Who actually owns the Appraisal?
The client, which in most real estate transactions is the lender and due to the fact that the lender is the one who engages the appraiser. While the home 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 home buyer is entitled to a copy of the report - it's usually included with all of the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; for example - for PMI removal, or estate planning or tax challenges, etc. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
DEFINITION OF CLIENT: The party or parties who engage an appraiser (by employment or contract) in a specific assignment. The client is identified by the appraiser in an appraisal, appraisal review, or appraisal consulting assignment (or in the assignment work file) is the party or parties with whom the appraiser has an appraiser-client relationship in the related assignment, and may be in individual, group, or entity.
What is “market value”?
Market Value is defined as a type of value, stated as and opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. Market value can also be defined as the most probable price which a property should bring in a competitive and open market.
Most states require that real estate appraisers are state licensed or certified. The state licensed or certified appraiser is trained to render an independent, impartial, and objective opinion based upon extensive education and experience requirements. To become licensed or certified, appraisers must fulfill rigorous education and experience requirements. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
What is the difference between an appraisal and a home inspection?
An appraiser is not a home inspector nor does he/she do a complete “home inspection”. A home inspection is a third-party evaluation of the accessible structure and mechanical systems of a house, from the roof to the foundation, etc. Appraisers perform analyses and render opinions or conclusions relating to the nature, quality, value or utility of specified interests in, or aspects of, identified real estate.
What is an “arms length transaction”?
An “Arms Length Transaction” is defined as a transaction that occurred under typical conditions in the marketplace where each of the parties were action in his/her own best interests.
What is “PMI”?
PMI stands for Private Mortgage Insurance. It insures a lender against loss on homes purchased with a down-payment of less than 20%. Once equity in the home reaches 20% you can eliminate the PMI.
What improvements add the most value to my property?
The “value added” aspect of an amenity can vary greatly depending on the market area. For example: adding a central air conditioner to a home in Miami, FL may add significant value. However, adding a central air conditioner to a home in International Falls, MN might probably won’t have much impact in value to the property. According to one national survey, the top improvements were siding replacement, deck addition, window replacement, and kitchen remodels.
The national average cost recouped was as follows:
Siding Replacement: 88%
Deck Addition: 85%
Window Replacement: 81%
Kitchen Remodels: 83%
Bathroom Remodels: 66-78%
Of course these are national averages and may vary depending on the region of the country in which the property is located, the quality of products used, and the varying degrees of improvements made. Just remember, cost rarely equals value.
What is the difference between a “site built” home, a “manufactured” home and a “modular” home?
A “site built” home is constructed entirely at the building site. Site built homes are also referred to as “stick built” homes.
A manufactured home (also known as a mobile home or a trailer) is a single or multi-sectional home built on a permanent frame, like a steel undercarriage/chassis, with a removable transportation system (hitch and wheels). These multi-sectional parts joined at their destination. Manufactured houses are built in a factory and conform to a Federal building code (HUD) rather than to building codes at their destination. Manufactured homes are not always placed on a permanent foundation. Sometime they are placed on a less permanent foundation such as concrete pads with concrete block piers and some type of “skirting”, etc.
A modular home is also constructed in a factory and is multi-sectional but they are delivered to a site on a trailer or flat bed truck. The delivered home may be in the form of panels that are assembled at the site, may be pre-cut and assembled on site, or may be pre-built and delivered in one piece. The home, panels or pre-cut panels are lifted from the trailer and attached to a foundation. A modular home may be single or multi-storied. Modular homes are not subject to HUD standards, but must be built to the state, local or regional building codes of their destination.
