Quality Appraisal, LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The appraisal process is an evaluation that leads to an opinion of value. The appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the home, less the depreciation and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most popular approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. One of the least common approaches in appraising residential properties 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.
Describe what an appraiser does(Back to top) An appraiser produces an impartial and well justified opinion of market value, to be used in making real estate transactions. Appraisers summarize their conclusions in appraisal reports.
What would cause me to request services from Quality Appraisal, LLC?(Back to top) There are many reasons to obtain an appraisal from Quality Appraisal, LLC with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
My agent performed a CMA for me. Is that the same as an appraisal?(Back to top) Frankly, they have nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use comparable sales which are verifiable resources. Location and architectural prices are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the biggest difference is the person behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.
What are the contents of an appraisal report? (Back 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, you'll usually see the following:
Once the appraisal has been completed, what assurance is there that the final number is veritable?(Back to top) In communicating an appraisal report, each appraiser must ensure the following:
Who engages the services of appraisers?(Back to top) Most of the time, appraisers are called upon by mortgage lenders to estimate the value of a house involved in a loan transaction. 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 Bernalillo County or other areas?(Back to top) Gathering data is one of the primary occupations of an appraiser. Data can be divided into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is collected from a variety of sources. To research recent sales to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers often need 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 service.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
How can a licensed appraiser help me?(Back to top) An appraisal is a valuable tool whenever your home's value is relevant to a financial decision. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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. Knowing its true value is essential to making wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI stands for Private Mortgage Insurance. This added plan guards the lender if a borrower defaults on the loan and the market price of the property 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 appointment(Back to top) We start with an inspection of the property. During this process, we 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, 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:
How does an appraiser define "Market Value"?(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Back 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 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 noted otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(Back to top) The added value of a particular amenity truly depends on the local market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.