Herman/Harriet Appraisal Group, LLC. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The process of performing an appraisal consists of an investigation which leads to an opinion of value. The real estate appraiser will use a few "approaches," typically three, to come to the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, minus depreciation and physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which deals with making a comparable analysis to other similar properties within a close proximity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly 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?(Go to list of questions) An appraiser produces a professional, unbiased opinion of market value, in the support of real property transactions. Appraisers illustate their professional conclusions in appraisal reports.
What would cause me to need services from Herman/Harriet Appraisal Group, LLC.?(Go to list of questions) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Appraisers do not do provide home inspections and are not home inspectors. An inspection is a third-party evaluation of the accessible structure and appliances of a house, from the roof to the bottom. For the most part, a home inspection report will explain the amenities and the requirements of the property: 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.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions) Simply put, it's like comparing broadband and dial-up. What the CMA depends on are vague trends. An appraisal is based on comparable sales that can be verified by records. Area and building costs are also precedent 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 largest differentiator is the person doing the report. 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 has formed their livelihood on valuing real estate in and around Somerset County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their outcome.
What does the appraisal report contain? (Go to list of questions)The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the report has been delivered, what assurance is there that the value indicated is veritable?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who are an appraiser's customers?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does Herman/Harriet Appraisal Group, LLC. get the data used to estimate values in Somerset County or other areas?(Go to list of questions) Compiling data is one of the primary occupations of an appraiser. Data can be divided into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is collected 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 verify actual sales prices in a market. Appraisers often have 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 gathers general data from his or her past experience in doing assignments for other houses in the same market.
What can a full appraisal do for me?(Go to list of questions) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. When selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Herman/Harriet Appraisal Group, LLC. is the best documentation to ensure assets are split up evenly. 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?(Go to list of questions) PMI stands for Private Mortgage Insurance. This supplemental policy protects the lender if a borrower defaults on the loan and the market price of the property is lower than what the borrower still owes on the loan. 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.
Do you need anything from the homeowner in advance?(Go to list of questions) The first step in most appraisals is the home 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. 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 outside walls.
To help expedite our work plus ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Go to list of questions) In most real estate transactions, the appraisal is ordered by the lender. While the 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 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.
This rule doesn't apply when a home owner hires an appraiser directly. In these scenarios, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(Go to list of questions) It really depends on the market. 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 weren't far behind, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.