Hampton Roads Valuations has answers to "Frequently Asked Questions"
||Premier Appraisal Group, Inc. is prepared to talk to you about any inquiries you might have about appraisals in Chesapeake and Chesapeake City County.
Contact us today to talk about how we can help solve your specific valuation problems.
Define the term "Appraisal"
Describe what an appraiser does
Why would a person need your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the appraisal has been completed, what guarantee is there that the value conclusion is accurate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does Premier Appraisal Group, Inc. get the information used to estimate values in Chesapeake City County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?
The appraisal process is an evaluation that generates an opinion of value.
The real estate appraiser will use a number of "approaches," typically three, to conclude the estimation of market value.
One of the methods 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.
The Sales Comparison Approach deals with searching for comparable houses nearby and discovering the value based on making a comparison of those properties to the property being appraised.
The Sales Comparison Approach is commonly the most accurate and best indicator of value for a residential property.
The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
An appraiser provides an impartial and well substantiated determination of market value, often in the context of a real estate sale.
Appraisers document their expert findings in appraisal reports.
There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions.
Some other reasons for getting an appraisal report include:
If you need a more detailed explanation of the appraisal process, please click here.
- If you are applying for a loan.
- To reduce your property taxes.
- To demonstrate a homeowner's acquired equity and remove PMI.
- To fight inflated property taxes.
- To deal with an estate.
- To give you a leg-up when purchasing a home.
- To find a reasonable price when putting your home on the market.
- To ensure parties are provided just compensation in eminient domain cases.
- Government agencies such as the IRS need an appraisal on every house.
- It's possible you could be involved in a lawsuit - an appraisal will definitely help.
Appraisers do not do perform house inspections and are not home inspectors.
An inspection is a third-party evaluation of the available structure and appliances of a house, from the roof to the foundation.
The stereotypical house inspector's report will contain an evaluation of the condition of the property's heating systems, 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.
Frankly, they have nothing in common.
The CMA utilizes market trends to create most of their business.
An appraisal relies on comparable sales that can be verified by public record.
Also, the appraisal verifies other factors like condition, location and replacement prices.
All a CMA does is generate a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the most significant factor is the person creating the report.
Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's.
A certified, Virginia & North Calolina licensed professional who has formed a career on valuing homes in and around Hampton Roads & North-East North Carolina creates the appraisal.
Moreover, the appraiser is an unbiased 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.
The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report
- The client and whose purposes the appraisal is to serve.
- The intended use of the report.
- The appraisal's purpose.
- The type of value reported and a definition of that value.
- The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
- Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
- All 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 considered while working up the appraisal.
In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
To become a state licensed appraiser, we must satisfy intense education and experience requirements that train us to produce an unbiased opinion.
Likewise, appraisers must obey a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis utilized in the appraisal was appropriate.
- That substantial errors of omission or commission were not committed individually or collectively.
- That appraisal services were not carried out in a careless or negligent fashion.
- The final appraisal report was transparent, credible and conclusive.
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Regulations regarding licensing and certification vary from state to state. However, licensing and certification typically translates to many hours of coursework, tests and practical experience.
Once licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.
Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan.
Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Compiling data is one of the primary activities of an appraiser.
Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is received from a variety of places.
Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables.
Tax records and other public documents reveal actual sales prices in a market.
Appraisers routinely have 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 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.
An appraisal is a valuable tool anytime your home's value is pertinent to a financial decision.
When selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market.
If you're buying, it makes sure you don't overpay.
For people settling an estate or divorce, an appraisal from Premier Appraisal Group, Inc. is the best documentation to ensure assets are split up fairly.
A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
PMI is the common abbreviation for for Private Mortgage Insurance.
PMI protects the lender in case a borrower doesn't pay on the loan and the market price of the home is less than the loan balance.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
The savings from dropping the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. Premier Appraisal Group, Inc. is a name you can trust when it comes to real estate value trends in Chesapeake and Chesapeake City County. Contact us today.
The first step in most appraisals is the home 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.
The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can get to appliances like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
- Any records on the purchase of the property for the last three years.
- A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
- Most recent real estate tax bill from the city and or legal description of the property.
In real estate appraising, 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."
For mortgage transactions, the lender requests 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 bundled 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 engaging the appraiser for things outside securing a mortgage.
In these situations, the appraiser may state the purpose of the appraisal; 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.
The answer to this is different depending upon the location of the home.
installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
As a rule, the most value returned from renovating a home comes in the kitchen.
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, returning 85%.
On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.