Appraise Metro DC, LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal (Return to top)The process of writing an appraisal deals with an evaluation which leads to an opinion of value. This opinion or estimate is found through the use of a formal process that usually uses the three main "common approaches to value". 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, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which concerns figuring a comparison to similar houses close by. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. 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 income a property would bring in.
Describe what an appraiser does (Return to top)An appraiser generates a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers show their findings in appraisal reports.
Why would someone need a real estate appraisal? (Return to top)There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:
How is an appraisal different than a home inspection? (Return to top)The appraiser is not a home inspector and does not do a full home inspection. The point of a home inspection is to investigate the structure of the house from basement to rooftop. 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 other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)? (Return to top)Simply put, it's like comparing sugar and saccharin. The CMA depends on vague local market trends. Appraisals use comparable sales which are valid resources. The appraisal report will also include location and construction values. 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 behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write 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 made a career on valuing properties in and around Fairfax County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their value conclusion.
What's in an appraisal report? (Return to top)The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the appraisal has been delivered, how can I have certainty that the final number is legitimate? (Return to top)In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who engages the services of appraisers? (Return to top)Most of the time, appraisers are employed by lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Fairfax County or other areas? (Return to top)Compiling information is one of the primary tasks an appraiser engages in. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.
General data is collected from a number of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why should I hire a licensed appraiser? (Return to top)An appraisal is a worthwhile anytime the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; 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. Without knowing its real value, wise financial decisions are impossible.
Should I do anything in advance of the appraisal appointment (Return 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 features. 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 bushes so we can be free to get an accurate measurement of outside walls.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"? (Return to top)In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report? (Return 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 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 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 do whatever they want with the appraisal.
A home's location - what city it is in and even what part of that city - is key to this popular question.
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.
We provide Consultation services to help determine what improvements can increase your home's value.
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