Saxton Appraisals, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) An appraisal report is a thought process that concludes with an opinion of value. This opinion or estimate is figured using a formal method that generally utilizes three "common approaches to value". One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, minus depreciation and physical deterioration, adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with concluding a comparison to similar properties nearby. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a home. 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 income generated by the property.
What does an appraiser do?(See list of FAQ's) An appraiser provides a professional, unbiased determination of market value, often in the context of a real estate sale. Appraisers reveal the details of their investigation in appraisal reports.
What would cause me to require your services?(See list of FAQ's) There are many reasons to obtain an appraisal from Saxton Appraisals, Inc. with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Appraisers do not do complete residential property inspections and are not home inspectors. A third-party home inspector will judge the structure of the property, from the roof to the foundation. The general house inspector's report will contain an evaluation of the condition of the home's heating systems, 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.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) To be blunt, it's like comparing sugar and saccharin. What the CMA depends on are superficial trends. The appraisal depends on similar valid comparable sales. Also, the appraisal looks at other factors like condition, area and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is who's behind the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for work they perform, regardless of their value conclusion.
What are the contents of an appraisal report? (See list of FAQ's)Every appraisal should reflect a credible value opinion and must document the following:
Once the assignment has been delivered, how can I have a guarantee that the final number is trustworthy?(See list of FAQ's) In the documentation of an appraisal, each appraiser must make sure of the following:
Who do appraisers work for?(See list of FAQ's) Mortgage lenders are an appraiser's most likely client, needing their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Douglas County or other areas?(See list of FAQ's) Compiling information is one of the primary roles of an appraiser. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at tax records and other public documents. 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 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.
What can a full appraisal do for me?(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. When selling your house, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Saxton Appraisals, Inc. is the best way to ensure assets are split up properly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI stands for Private Mortgage Insurance. This supplemental policy takes care of the lender in the event a borrower doesn't pay 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.
How do I get ready for the appraiser?(See list of FAQ's) The first step in most appraisals is the home inspection. 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 features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
What is "Market Value?"(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(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 certainly entitled to a copy of the appraisal - 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 cases, 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.
How can I get the most ROI out of home improvements?(See list of FAQ's) It really depends on the market. 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 most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms weren't far behind, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.