Arrowhead Appraisals, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) The method of performing an appraisal consists of an investigation which leads to an opinion of value. The appraiser will use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find the value of a house; it involves finding what the improvements would cost without physical degradation, adding the land value. The Sales Comparison Approach deals with searching for similar houses in close proximity and figuring out the value based on comparing those homes to the house in question. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(See list of FAQ's) An appraiser generates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers show their expert conclusions in appraisal reports.
What are the reasons someone would request your services?(See list of FAQ's) There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
How is an appraiser different than a home inspector? (See list of FAQ's)Appraisers do not do provide house inspections and are not home inspectors. A third-party home inspector will judge the structure of the home, from the roof to the foundation. Commonly, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(See list of FAQ's) Frankly, it's like comparing opera to country. The CMA uses market trends to create most of their business. An appraisal relies on comparable sales that can be proven by records. Area and architectural costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is frankly the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Wisconsin licensed professional who has formed a career on valuing homes in and around Waukesha County creates the appraisal. Moreover, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (See list of FAQ's)Each report should demonstrate a credible estimate of value and should document the following:
Once the appraisal is done, what guarantee is there that the final number is accurate?(See list of FAQ's) In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers?(See list of FAQ's) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Arrowhead Appraisals, LLC get the data used to estimate values in Waukesha County or other areas?(See list of FAQ's) One of the most important things an appraiser does is to collect property data. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
What can a full appraisal do for me?(See list of FAQ's) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine 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. 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. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. This added policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the home is less than what is owed on the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
Does the appraiser need anything from the homeowner in advance?(See list of FAQ's) The first step in most appraisals is the home inspection. 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 landscaping 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:
Define "Market Value"(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(See list of FAQ's) For mortgage transactions, the lender orders 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 entitled to a copy of the report - 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.
This rule doesn't apply when a home owner engages an appraiser directly. 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.
Which home renovations add the most to the price?(See list of FAQ's) This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.