Veritech Appraisal has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The method of creating an appraisal consists of an evaluation which leads to an opinion of value. This opinion or estimate is concluded by a formal process that commonly uses the three main "common approaches to value". One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which concerns concluding a comparison to comparable homes close by. Being the most popular approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residential property. The Income Approach is generally used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
Describe what an appraiser does(Go to list of questions) An appraiser forumlates a fair and credible opinion of market value, in the support of real property transactions. Appraisers demonstrate their expert investigation in appraisal reports.
What would cause me to need services from Veritech Appraisal?(Go to list of questions) There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Home inspectors do not estimate an opinion of value and are not appraisers. A third-party home inspector will investigate the structure of the house, from the roof to the foundation. The archetypal house inspector's report will include an evaluation of the condition of the house's heating system, 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, it's like comparing Shakespeare to reality TV. The CMA depends on vague local market trends. An appraisal relies on comparable sales that can be verified by records. The appraisal report will also include location and building values. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Michigan licensed professional who made their livelihood on valuing homes in and around Grand Traverse County is behind the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.
What does the appraisal report contain? (Go to list of questions)The main point of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Upon completion of the report, how can I have certainty that the final number is valid?(Go to list of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires Veritech Appraisal(Go to list of questions) Typically, appraisers are employed by mortgage lenders to render a value opinion on real estate involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Veritech Appraisal get the information used to estimate values in Grand Traverse County or other areas?(Go to list of questions) One of the primary tasks an appraiser must accomplish is to gather property data. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is collected from a number of places. To look up recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents that are usually online nowadays. Appraisers routinely 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 last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
How can a licensed appraiser help me?(Go to 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. When selling your house, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Veritech Appraisal is the best way to ensure assets are divided properly. Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it?(Go to list of questions) PMI is an acronym for Private Mortgage Insurance. This supplemental policy protects the lender in the event a borrower is unable to pay on the loan and the value of the home is lower 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(Go to list of questions) The first step in most appraisals is the property 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
What is "Market Value?"(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. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the appraisal - 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 hiring 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 do whatever they want with the appraisal.
Which home renovations add the most to the price?(Go to list of questions) It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
As a rule, the most value returned from renovating a home comes in the kitchen. 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 weren't far behind, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.