Elite Appraisal Group has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions)The procedure of producing an appraisal consists of an estimation which leads to an opinion of value. This opinion or estimate is found by a formal method that commonly utilizes the three main "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical dilapidation, plus the land value. The Sales Comparison Approach involves finding comparable houses in close proximity and discerning value based on comparing those homes to the property being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is mainly 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 would bring in.
What does an appraiser do?(Go to list of questions)An appraiser produces an objective and well supported assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their conclusions in appraisal reports.
Why would I require services from Elite Appraisal Group?(Go to list of questions)There are a lot of reasons to purchase an appraisal from Elite Appraisal Group with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
How is an appraiser different than a home inspector? (Go to list of questions)The appraiser is not a home inspector and does not do a full home inspection. An inspection is a third-party investigation of the livable structure and mechanical systems of a property, from the roof to the foundation. Generally, a home inspection report will discuss the amenities and the necessities of the house: 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 other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions)Frankly, they have nothing in common. What the CMA depends on are vague trends. An appraisal relies on comparable sales that can be validated by records. Location and construction costs are also a priority in an appraisal. 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 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. A certified, California licensed professional who bases a career on valuing properties in and around Orange County is behind 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 collect only a previously agreed upon sum for assignments, regardless of their value conclusion.
What's in an appraisal report? (Go to list of questions)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:
Upon completion of the appraisal, what assurance is there that the value indicated is accurate?(Go to list of questions)In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers?(Go to list of questions)Typically, appraisers are called upon by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Orange County or other areas?(Go to list of questions)Compiling information is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is collected from a many places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates 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)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 figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Elite Appraisal Group is the best documentation to ensure assets are split up evenly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions)PMI is an acronym for Private Mortgage Insurance. It protects the lender in case a borrower is unable to pay on the loan and the market price of the property is less 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.
Does the appraiser need anything from the homeowner in advance?(Go to list of questions)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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes 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:
What is "Market Value?"(Go to list of questions)In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Go to list of questions)For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 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 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 use the appraisal for any purpose.
Which home renovations add the most to the price?(Go to list of questions)The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
As a rule, the best ROI from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also boost 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.