SPERANO APPRAISALS, INC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The procedure of performing an appraisal deals with an estimation which leads to an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the home, less the age and physical deterioration, adding the land value. The Sales Comparison Approach deals with searching for similar homes in the vicinity and discovering the value based on making a comparison of those homes to the home being investigated. The Sales Comparison Approach is normally the most accurate and best indicator of value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Back to top) An appraiser generates a professional, unbiased determination of market value, in the support of real property exchanges. Appraisers summarize their expert findings in appraisal reports.
What would cause me to require your services?(Back to top) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
What is the difference between an appraisal and a home inspection? (Back to top)Appraisers do not do perform house inspections and are not home inspectors. A third-party home inspector will investigate the structure of the house, from the top to the foundation. For the most part, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) To be blunt, it's like comparing opera to country. The CMA relies on indistinct trends in the market. Appraisals use comparable sales which are verifiable resources. In addition, the appraisal verifies other factors like condition, location and building prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who made a career on valuing homes in and around Ontario County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (Back to top)Each report must reflect a supported estimate of value and must clearly state the following:
After completing the appraisal, what assurance is there that the value indicated is legitimate?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who hires SPERANO APPRAISALS, INC(Back to top) Most of the time, appraisers are hired by mortgage lenders to render a value opinion on real estate involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does SPERANO APPRAISALS, INC get the data used to estimate values in Ontario County or other areas?(Back to top) Collecting data is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is collected from a numerous places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we research tax records 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 product.
And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(Back to top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. 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 means you can make wise financial decisions.
What exactly is PMI and how can I get rid of it?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan takes care of the lender in case a borrower defaults on the loan and the market price of the home 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.
How do I get ready for the appraiser?(Back to top) We begin 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, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
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 certainly entitled to a copy of the appraisal - it's usually included 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 cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated 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?(Back to top) This really depends on where the home is. 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. 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%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.