Clancy Appraisal Company has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The process of performing an appraisal report consists of an inspection which forms an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to come to the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, minus age and physical deterioration, adding the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which involves figuring a comparison to similar houses close by. The Sales Comparison Approach is normally the most accurate and best indicator of value for a home. One of the least common approaches in appraising houses 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 capital produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser generates an impartial and well supported determination of market value, in the support of real property exchanges. Appraisers present their expert conclusions in appraisal reports.
Why would a person need services from Clancy Appraisal Company?(Go to list of questions) There are many reasons to purchase an appraisal from Clancy Appraisal Company with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
How is an appraisal different than a home inspection? (Go to list of questions)Appraisers do not do perform house inspections and are not home inspectors. An inspection is a third-party investigation of the available structure and electrical and mechanical systems of a property, from the roof to the bottom. The standard house inspector's report will contain an evaluation of the integrity of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
My agent performed a CMA for me. Is that the same as an appraisal?(Go to list of questions) Frankly, they have nothing in common. What the CMA relies upon are superficial trends. An appraisal is based on comparable sales that can be validated by public record. The appraisal report will also include neighborhood and construction values. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person behind the report is hands down the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Massachusetts licensed professional who made a career on valuing real estate in and around Barnstable County creates the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (Go to list of questions)The main purpose of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
After completing the appraisal, what guarantee is there that the value conclusion is accurate?(Go to list of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who engages the services of appraisers?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, 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 an appraiser get the information used to estimate values in Barnstable County or other areas?(Go to list of questions) Collecting data is one of the primary things an appraiser performs. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.
General data is collected from a many sources. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we look at tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assimilates 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?(Go to list of questions) An appraisal is a valuable tool anytime the value of your home is relevant to a financial decision. For those selling a home, you'll want to figure out 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. 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. 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?(Go to list of questions) PMI is an acronym for Private Mortgage Insurance. This supplemental plan covers the lender in the event a borrower is unable to pay on the loan and the value of the home is less than the balance of 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.
How do I get ready for the appraiser?(Go to list of questions) We begin with an inspection of the property. 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. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
What does "Market Value" mean?(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Go to 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 appraisal - it's usually bundled with all the other closing documents - but is not entitled 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 how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Go to list of questions) The added value of a particular amenity truly depends on the local market. For example, 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.
As a rule, the best ROI from renovating a home comes in the kitchen. 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 weren't far behind, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.