E-Appraisal, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The appraisal process is an evaluation that produces an opinion of value. The appraiser must use a several "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find the value of a house; it involves figuring what the improvements would cost minus physical degradation, plus the land value. The Sales Comparison Approach involves searching for similar properties nearby and finding value based on making a comparison of those prior sales to the property being investigated. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser offers a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers show their investigation in appraisal reports.
What are the reasons a person would need a real estate appraisal?(See list of FAQ's) There are a lot of reasons to purchase an appraisal from E-Appraisal, Inc. with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
How is an appraiser different than a home inspector? (See list of FAQ's)Appraisers do not do complete residential property inspections and are not home inspectors. The point of a home inspection is to investigate the structure of the house from bottom to rooftop. For the most part, a home inspection report will evaluate the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) Simply put, it's like comparing opera to country. The CMA utilizes market trends to create most of their business. The appraisal is reliant on specific valid comparable sales. In addition, the appraisal looks at other factors like condition, neighborhood and construction costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is the person creating the report. Real estate agents, who may not have a complete understanding 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. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What does the appraisal report contain? (See list of FAQ's)The main purpose of an appraisal report 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:
Once the report is done, how can I have confidence that the value conclusion is valid?(See list of FAQ's) In the documentation of an appraisal, each appraiser must make sure of the following:
Who employs appraisers?(See list of FAQ's) Most of the time, appraisers are hired by lenders to render a value opinion on a house involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Travis County or other areas?(See list of FAQ's) Collecting information is one of the primary things an appraiser does. Data can be described as either Specific or General. Specific data is collected from 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 variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Appraisers routinely need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
What can a full appraisal do for me?(See list of FAQ's) An appraisal is a valuable tool whenever the value of your home is relevant to a financial decision. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from E-Appraisal, Inc. is the best documentation to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI stands for Private Mortgage Insurance. This supplemental plan guards the lender in case a borrower defaults on the loan and the market price of the house is less 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.
Should I do anything in advance of the appraisal inspection(See list of FAQ's) We begin with an inspection of the home. During this process, the appraiser 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, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "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) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(See list of FAQ's) 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 were second, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.