The Affordable Appraisal Store L.L.C. has answers to "Frequently Asked Questions"
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The Affordable Appraisal Store L.L.C. is always ready to talk to you about any questions you might have about appraisals in Charlotte and Mecklenburg County.
Don't hesitate to contact us today.
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Define the term "Appraisal"
Describe what an appraiser does
What would cause me to need your services?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the appraisal, what assurance is there that the value conclusion is accurate?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does The Affordable Appraisal Store L.L.C. get the data used to estimate values in Mecklenburg County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?
Define the term "Appraisal" (Go to list of questions)
An appraiser provides an evaluation that produces an opinion of value.
There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation.
One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value.
Another of the processes is the Sales Comparison Approach - which deals with making a comparison to other similar nearby properties which have recently sold.
Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence.
One of the least common approaches in appraising houses is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the income produced by the property.
Describe what an appraiser does (Go to list of questions)
An appraiser offers a professional, unbiased assessment of market value, often in the context of a real estate purchase.
Appraisers demonstrate their expert analysis in appraisal reports.
What would cause me to need your services? (Go to list of questions)
There are a lot of reasons to order an appraisal from The Affordable Appraisal Store L.L.C. with the most common reason being real estate and mortgage transactions.
Some other reasons for getting an report include:
- If you are applying for a loan.
- To reduce your tax burden.
- To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
- To fight improperly assessed property taxes.
- If you need to settle an estate.
- To offer you an edge when purchasing a home.
- To figure out the most probable sales price when listing your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every property.
- It's possible you could be involved in a lawsuit - an appraisal will help.
For a more detailed description of the appraisal process click here.
The appraiser is not a home inspector and does not do a complete home inspection.
An inspection is a third-party evaluation of the accessible structure and mechanical systems of a home, from the roof to the bottom.
The stereotypical property inspector's report will contain an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)
To be honest, they have nothing in common.
The CMA uses market trends to create most of their business.
The appraisal depends on similar proven comparable sales.
The appraisal report will also include location 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.
The person behind the report is frankly the biggest difference between a CMA and an appraisal.
A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends.
The appraisal is created by a licensed, certified professional who makes a living out of valuing properties.
Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for work they perform, regardless of their value conclusion.
Each report should indicate a believable estimate of value and should clearly state the following:
- Who engaged the appraiser and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the appraiser's opinions and conclusions.
- Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
- Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work used while working up the job.
For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report
After completing the appraisal, what assurance is there that the value conclusion is accurate? (Go to list of questions)
In the documentation of an appraisal, each appraiser must make sure of the following:
- That the information analysis implemented in the appraisal was suitable.
- That critical errors of omission or commission were not committed individually or collectively.
- That appraisal services were not carried out in a careless or negligent manner.
- That a solid, defensible appraisal report was communicated.
To become a state licensed appraiser, we must fulfill intense education and experience requirements that give us the background to formulate an unbiased opinion.
Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Go to list of questions)
Licensing and certification is achieved through coursework, tests and experience working under a supervisor.
Once licensed, he or she must then take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.
Who engages the services of appraisers? (Go to list of questions)
Commonly, appraisers are hired by lenders to render a value opinion on a house involved in a loan transaction.
Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does The Affordable Appraisal Store L.L.C. get the data used to estimate values in Mecklenburg County or other areas? (Go to list of questions)
Compiling information is one of the primary roles of an appraiser.
Data can be categorized as either 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 gathered from a many places.
Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables.
Tax records and other courthouse documents verify actual sales prices in a market.
Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why should I hire a licensed appraiser? (Go to list of questions)
If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal.
If you're selling your house, an appraisal assists you in setting the most appropriate price.
If you're buying, it makes sure you don't overpay.
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. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it? (Go to list of questions)
PMI is the common abbreviation for for Private Mortgage Insurance.
This supplementary plan covers the lender in case a borrower defaults on the loan and the market price of the property is less than the balance of the loan.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
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Did you secure your mortgage with less than 20% down? Call The Affordable Appraisal Store L.L.C. today at (702) 379-1454 to see if you can cancel your Private Mortgage Insurance payment.
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Should I do anything in advance of the appraisal appointment (Go to list of questions)
The first step in most appraisals is the property 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 get 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, try if possible to have the following items:
- A survey or plot map of the property and building (if readily available).
- Title policy that lists encroachments or easements.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
- Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
- A list of "suggested" improvements if the property is to be appraised "as complete".
How does an appraiser define "Market Value"? (Go to list of questions)
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Once complete, who actually owns the appraisal report? (Go to list of questions)
For mortgage transactions, the lender orders the appraisal, either directly or through a third party.
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 report - 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 hiring the appraiser for things outside securing a mortgage.
In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others? (Go to list of questions)
It really depends on the market.
For example,
adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
No matter where you go, however, renovating a kitchen is almost always a safe investment.
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 were second, returning 85%.
Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.
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