ALSouth Appraisal Services LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Return to top) The process of performing an appraisal consists of an evaluation which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves concluding what the improvements would cost minus physical depreciation, adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable houses nearby. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
What does an appraiser do?(Return to top) An appraiser forumlates a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers demonstrate their expert conclusions in appraisal reports.
What are the reasons a person would need a real estate appraisal?(Return to top) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
How is an appraiser different than a home inspector? (Return to top)Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. An inspection is a third-party evaluation of the accessible structure and systems of a home, from the top to the bottom. For the most part, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed 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?(Return to top) Frankly, it's night and day. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are verifiable resources. Location and architectural values are also important in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The person creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Alabama licensed professional who bases a career on valuing properties in and around Geneva County creates the appraisal. 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 fee for assignments, regardless of their value conclusion.
What can I expect to see in my appraisal report? (Return 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 report, what assurance is there that the final number is valid?(Return to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Return to top) Most of the time, appraisers are employed by lenders to estimate the value of a home involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does ALSouth Appraisal Services LLC get the information used to estimate values in Geneva County or other areas?(Return to top) One of the main activities of an appraiser is to assimilate data. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is collected from a many sources. To find out about recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need to report when a property is 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 assembles 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?(Return 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. If you're selling your home, 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 ALSouth Appraisal Services LLC is the best way to ensure assets are divided properly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
What exactly is PMI and how can I get rid of it?(Return to top) PMI stands for Private Mortgage Insurance. It takes care of the lender in case a borrower doesn't pay on the loan and the value of the house is lower 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.
Should I do anything in advance of the appraisal inspection(Return to top) The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access appliances like furnaces and water heaters.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(Return to top) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Return 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 report - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may state 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?(Return to top) This really depends on where the home is. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 are right up there with kitchens, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.