Sargeant Appraisal Service has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions) An appraisal report is an investigation allowing the appraiser to come to an opinion of value. The appraiser must use a number of "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves finding what the improvements would cost less physical degradation, adding the land value. Easily the most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which involves making a comparison to similar homes nearby. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market 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.
Describe what an appraiser does(List of questions) An appraiser produces an unbiased and well justified opinion of market value, often in the context of a real estate exchange. Appraisers illustate their findings in appraisal reports.
What are the reasons someone would request a real estate appraisal?(List of questions) There are many reasons to purchase an appraisal from Sargeant Appraisal Service with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
What is the difference between an appraisal and a home inspection? (List of questions)Home inspectors do not generate an opinion of value and are not appraisers. The purpose of a home inspection is to investigate the structure of the home from foundation to attic. Generally, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, 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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) Simply, they share nothing in common. What the CMA relies upon are ill-defined trends. An appraisal utilizes comparable sales that can be validated by public record. Area and building costs are also a priority in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The credentials of the person creating the report is frankly the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the agent, whose income is tied to the price of the home.
What does the appraisal report contain? (List of questions)Every report should demonstrate a supported value opinion and must clearly state the following:
Upon completion of the report, what assurance is there that the value indicated is accurate?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Mortgage lenders are an appraiser's typical client, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Sargeant Appraisal Service get the data used to estimate values in Rutland County or other areas?(List of questions) Collecting data is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a number of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(List of questions) An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. When selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Sargeant Appraisal Service is the best documentation to ensure assets are split up evenly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.
What exactly is PMI and how can I get rid of it?(List of questions) PMI is an acronym for Private Mortgage Insurance. This supplementary policy covers the lender in case a borrower defaults on the loan and the market price of the house 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.
Should I do anything in advance of the appraisal inspection(List of questions) We begin with an inspection of the home. 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 status of its amenities. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes 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:
What is "Market Value?"(List of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(List of questions) 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 report - 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define how the appraisal can be used; 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.
I want to get more for my house. Where should I spend money renovating?(List of questions) This really depends on where the home is. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.