Mid-State Appraisal Services, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) The process of performing an appraisal consists of an inspection which forms an opinion of value. This opinion or estimate is figured by using a formal method that typically utilizes three "common approaches to value". One of the three is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves finding comparable homes in close proximity and finding value based on making a comparison of those houses to the home in question. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a house. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser generates a professional, unbiased assessment of market value, often in the context of a real estate sale. Appraisers show their investigation in appraisal reports.
Why would I request your services?(See list of FAQ's) There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an report include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Home inspectors do not estimate an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the available structure and appliances of a property, from the top to the foundation. The standard house inspector's report will contain an evaluation of the condition of the property's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) To be blunt, it's like comparing sugar and saccharin. The CMA uses market trends to create most of their business. The appraisal is based on specific verifiable comparable sales. The appraisal report will also include location and construction costs. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
Who's creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome.
What does the appraisal report contain? (See list of FAQ's)The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the report has been completed, how can I have certainty that the value indicated is legitimate?(See list of FAQ's) In communicating an appraisal report, each appraiser must make sure of the following:
Who hires Mid-State Appraisal Services, Inc.(See list of FAQ's) Mortgage lenders are an appraiser's typical customer, 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 divorce and estate settlements.
Where does Mid-State Appraisal Services, Inc. get the information used to estimate values in Kittitas County or other areas?(See list of FAQ's) One of the most important activities of an appraiser is to compile property data. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is gathered from a many places. To look up recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other public 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 gathers general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) 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 figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Mid-State Appraisal Services, Inc. is the best way to ensure assets are divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. This supplementary plan covers the lender if a borrower doesn't pay on the loan and the value of the property 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.
Does the appraiser need anything from me in advance?(See list of FAQ's) The first step in most appraisals is the property 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. On the home's interior, pick up any clutter and make sure 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.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) 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 entitled to a copy of the report - 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 engages an appraiser directly. In these scenarios, the appraiser may define 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.
How can I get the most ROI out of home improvements?(See list of FAQ's) The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
As a rule, the best ROI from renovating a home comes in the kitchen. 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 add value would be painting just for the sake of redecorating.