Capital Appraisal Services, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Back to top) An appraisal is an evaluation leading to an opinion of value. This opinion or estimate is concluded by using a formal method that generally utilizes the three main "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, minus age and physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which involves finding a comparable analysis to other similar nearby properties which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a residential property. The Income Approach is generally used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
What does an appraiser do?(Back to top) An appraiser forumlates a fair and credible assessment of market value, often in the context of a real estate sale. Appraisers present their professional conclusions in appraisal reports.
Why would I need services from Capital Appraisal Services, Inc.?(Back to top) There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
How is an appraiser different than a home inspector? (Back to top)The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party investigation of the livable structure and mechanical systems of a home, from the roof to the foundation. Usually, a home inspection report will evaluate 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(Back to top) To be blunt, it's like comparing Shakespeare to reality TV. The CMA uses market trends to conduct most of their business. An appraisal utilizes comparable sales that can be proven by records. The appraisal report will also contain area and building prices. 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 biggest difference is who's behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who made a career on valuing homes in and around Lee County creates the appraisal. Moreover, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the price of the home.
What are the contents of an appraisal report? (Back to top)The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, what guarantee is there that the value conclusion is legitimate?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers?(Back to top) Mortgage lenders are an appraiser's typical customer, using their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Capital Appraisal Services, Inc. get the information used to estimate values in Lee County or other areas?(Back to top) One of the most important activities of an appraiser is to assimilate property data. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is received from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. 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 product.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
How can a licensed appraiser help me?(Back to top) 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, be sure you're not 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 the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower defaults on the loan and the value of the house is lower than what the borrower still owes on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Does the appraiser need anything from the homeowner in advance?(Back to top) We begin with an inspection of the home. 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. 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 bushes and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(Back to top) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Back to 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 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 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 use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Back to top) The answer to this is different depending upon the location of the home. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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, something that may not add value would be painting just for the sake of redecorating.