Barnes Appraisal Service has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) An appraisal report is an estimation that concludes with an opinion of value. This opinion or estimate is found through the use of a formal process that usually uses three "common approaches to value". One of the methods is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparable analysis to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most definitive and best indicator of value for a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to figure the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(See list of FAQ's) An appraiser forumlates an impartial and well supported assessment of market value, in the support of real property exchanges. Appraisers reveal the details of their professional analysis in appraisal reports.
Why would a person need services from Barnes Appraisal Service?(See list of FAQ's) There are many reasons to purchase an appraisal from Barnes Appraisal Service with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
How is an appraisal different than a home inspection? (See list of FAQ's)Home inspectors do not figure out an opinion of value and are not appraisers. The purpose of a home inspection is to evaluate the structure of the house from bottom to top. Generally, a home inspection report will discuss the amenities and the requirements 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Frankly, it's like comparing broadband and dial-up. What the CMA relies upon are vague trends. An appraisal is based on comparable sales that can be validated by records. In addition, the appraisal verifies other factors like condition, location and building costs. All a CMA does is generate 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 behind the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce 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 flat fee for assignments, regardless of their value conclusion.
What does the appraisal report contain? (See list of FAQ's)The main objective 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, you'll usually see the following:
After completing the appraisal, how can I have a guarantee that the value indicated 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 typical client, using their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Tulsa County or other areas?(See list of FAQ's) Gathering data is one of the primary tasks an appraiser does. Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data 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 need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses 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. For those selling a home, you'll want to determine 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 commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Barnes Appraisal Service is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. This supplemental policy takes care of the lender in the event a borrower defaults on the loan and the market price of the house is less than what is owed 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 me in advance?(See list of FAQ's) 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 status of its amenities. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any bushes and move any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances 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"(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(See list of FAQ's) 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.
The exception to this rule is when a home owner hires an appraiser directly. In these scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(See list of FAQ's) This really depends on where the home is. 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 weren't far behind, yielding 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 an oddball for your neighborhood in terms of size.