Gillispie Appraisal Services has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) An appraisal report is an investigation that concludes with an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the property, minus depreciation and physical deterioration, plus the land value. The Sales Comparison Approach deals with searching for similar properties in the vicinity and finding value based on comparing those prior sales to the home being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. One of the least common approaches in appraising homes is the Income Approach, which is generally used to determine the market value of a property based on what an investor would pay based on the income produced by the property.
What does an appraiser do?(See list of FAQ's) An appraiser forumlates an unbiased and well justified assessment of market value, in the support of real property exchanges. Appraisers demonstrate their findings in appraisal reports.
What are the reasons I would request your services?(See list of FAQ's) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:
How is an appraiser different than a home inspector? (See list of FAQ's)Appraisers do not do perform house inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the home from basement to top. For the most part, a home inspection report will discuss the amenities and the necessities of the home: 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(See list of FAQ's) To be honest, they have nothing in common. The CMA relies on vague market trends. An appraisal is based on comparable sales that can be proven by records. Also, the appraisal checks other factors like condition, area and replacement prices. The CMA will provide a non-specific 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. 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. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, whose income is tied to the value of the home.
What can I expect to see in my appraisal report? (See list of FAQ's)Every report must indicate a supported value opinion and must clearly state the following:
Upon completion of the report, what guarantee is there that the value indicated is valid?(See list of FAQ's) 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?(See list of FAQ's) Typically, appraisers are employed by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Pueblo County or other areas?(See list of FAQ's) Compiling information is one of the primary roles of an appraiser. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is collected from a numerous sources. To look up recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers often need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
What can a full appraisal do for me?(See list of FAQ's) An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. When selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. 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.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. This added plan covers the lender in case a borrower defaults on the loan and the market price of the home is less than the loan balance. 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.
How do I get ready for the appraiser?(See list of FAQ's) The first step in most appraisals is the home inspection. 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 bushes so we can be free to get an accurate measurement of exterior walls.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(See list of FAQ's) 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?(See list of FAQ's) For mortgage transactions, the lender orders 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 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these situations, 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?(See list of FAQ's) A home's location - what city it is in and even what part of that city - is key to this popular question. 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%. On the contrary, something that may not add value would be painting just for the sake of redecorating.