Noonan Appraisers has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Return to top) An appraisal report is an inspection allowing the appraiser to come to an opinion of value. The appraiser will use a few "approaches," typically three, to come to the estimation of market value. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves searching for comparable houses in close proximity and figuring out the value based on making a comparison of those prior sales to the house being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to determine the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Return to top) An appraiser provides an unprejudiced and well justified opinion of market value, often in the context of a real estate sale. Appraisers reveal the details of their expert findings in appraisal reports.
Why would someone require your services?(Return to top) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
My agent performed a CMA for me. Is that the same as an appraisal?(Return to top) Simply put, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to create most of their business. An appraisal utilizes comparable sales that can be proven by public record. The appraisal report will also include area 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 biggest difference is the person creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their outcome.
What can I expect to see in my appraisal report? (Return to top)The main objective of an appraisal report is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the assignment is done, how can I have certainty that the final number is veritable?(Return to top) In communicating an appraisal report, each appraiser must ensure the following:
Who do appraisers work for?(Return to top) Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Noonan Appraisers get the data used to estimate values in Franklin County or other areas?(Return to top) Collecting information is one of the primary tasks an appraiser does. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is gathered from a many sources. To find out about recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents. Appraisers routinely have to report when a property is in a flood zone, and 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 properties in the same market.
Why should I hire a licensed appraiser?(Return 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 a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Noonan Appraisers is the best way to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Return to top) PMI stands for Private Mortgage Insurance. This supplemental plan 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 the borrower still owes 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?(Return to top) We start with an inspection of the home. During this process, the appraiser 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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(Return to top) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Return to top) 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 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 hires 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 use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Return to top) This really depends on where the home is. For example, installing 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 help the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.