Bowers Appraisal Service, LLP has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The appraisal process is an estimation that produces an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. Easily the most common approach in figuring the value of a house is the Sales Comparison Approach which involves figuring a comparison to similar homes nearby. Usually, the Sales Comparison Approach is the most definite 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(List of questions) An appraiser produces an impartial and well substantiated opinion of market value, in the support of real property exchanges. Appraisers exhibit their professional conclusions in appraisal reports.
What would cause me to request your services?(List of questions) There are many reasons to get an appraisal from Bowers Appraisal Service, LLP with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
Is an appraisal the same as a home inspection? (List of questions)Home inspectors do not produce an opinion of value and do not use the same forms as appraisers. The purpose of a home inspection is to investigate the structure of the house from bottom to rooftop. The standard house inspector's report will contain an evaluation of the condition of the property's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) Honestly, they have nothing in common. The CMA utilizes market trends to create most of their business. An appraisal is based on comparable sales that can be validated by records. Area and construction prices 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.
Who's creating the report is actually the biggest 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, Maryland licensed professional who made a career on valuing real estate in and around Washington County creates the appraisal. 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 collect only a flat sum for work they perform, regardless of their value conclusion.
What can I expect to see in my appraisal report? (List of questions)Each report should indicate a supported value opinion and should identify the following:
Upon completion of the report, how can I have assurance that the value conclusion is accurate?(List of questions) In the documentation of an appraisal, 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 most likely client, requiring their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Bowers Appraisal Service, LLP get the data used to estimate values in Washington County or other areas?(List of questions) One of the main activities of an appraiser is to collect data. 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 noted by the appraiser while on site.
General data is gathered from a many places. To research recent sales to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents. Flood zone data is retrieved 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.
What can a full appraisal do for me?(List of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the 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. When buying, you can avoid overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from Bowers Appraisal Service, LLP is the best way to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary policy protects the lender if a borrower doesn't pay on the loan and the market price of the home is less than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal inspection(List of questions) We begin 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. Inside, make sure it is clutter free and that we can get 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.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean?(List of questions) 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?(List of questions) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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 bundled 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define 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?(List of questions) The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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, returning 85%. Adding bedrooms and baths can also increase 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.