Techcorps Real Estate has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Back to top) An appraisal report is an estimation that concludes with an opinion of value. This opinion or estimate is concluded by a formal process that usually uses three "common approaches to value". One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with finding comparable homes nearby and discovering the value based on comparing those homes to the house being appraised. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
What does an appraiser do?(Back to top) An appraiser produces a fair and credible determination of market value, in the support of real estate exchanges. Appraisers reveal the details of their expert investigation in appraisal reports.
Why would I require a real estate appraisal?(Back to top) There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) To be blunt, it's apples and oranges. The CMA relies on indefinite local market trends. Appraisals use comparable sales which are verifiable resources. The appraisal report will also include location and building prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
But the biggest difference is who's behind the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who bases a career on valuing homes in and around Fairfax County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price 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? (Back to top)The main purpose of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the report is done, how can I have confidence that the value indicated is veritable?(Back to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who engages the services of appraisers?(Back to top) Typically, appraisers are employed by mortgage lenders to render a value opinion on real estate involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Fairfax County or other areas?(Back to top) Collecting information is one of the primary roles of an appraiser. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a many places. To research recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we look at 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 servers.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Back to top) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your house, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Techcorps Real Estate is the best documentation to ensure assets are split up fairly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is an acronym for Private Mortgage Insurance. This added policy protects the lender if a borrower defaults on the loan and the value of the property 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.
Does the appraiser need anything from the homeowner in advance?(Back to top) 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 amenities. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(Back to top) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Back to top) In most real estate transactions, the appraisal is ordered by the lender. 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 appraisal - 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.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state 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.
How can I get the most ROI out of home improvements?(Back to top) The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe move. 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.