A.C. Read Appraisal Service has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal? (Return to top)An appraisal is a thought process that concludes with an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find value; it involves concluding what the improvements would cost minus physical degradation, adding the land value. The Sales Comparison Approach involves searching for similar houses nearby and finding value based on making a comparison of those properties to the house being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of 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 income a property produce.
Describe what an appraiser does (Return to top)An appraiser generates an unbiased and well supported assessment of market value, often in the context of a real estate sale. Appraisers demonstrate their expert findings in appraisal reports.
But the most significant factor is the person creating the report. 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, Pennsylvania licensed professional who bases their livelihood on valuing homes in and around Monroe 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 accept a previously agreed upon sum for assignments, regardless of their outcome.
What's in an appraisal report? (Return to top)Each report should indicate a credible estimate of value and must identify the following:
After completing the report, how can I have assurance that the value indicated is valid? (Return to top)In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser? (Return to top)Mortgage lenders are an appraiser's most likely client, needing their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does A.C. Read Appraisal Service get the information used to estimate values in Monroe County or other areas? (Return to top)Gathering data is one of the primary activities of an appraiser. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is received from a variety of sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser? (Return to top)If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're selling your house, an appraisal helps you set 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 A.C. Read Appraisal Service is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it? (Return to top)PMI stands for Private Mortgage Insurance. PMI guards the lender in case a borrower doesn't pay on the loan and the value of the house is lower than what the borrower still owes on 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.
How do I get ready for the appraiser? (Return to top)We start with an inspection of the home. 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 status of its amenities. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
Define "Market Value" (Return to top)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? (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 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.
The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
As a rule, the most value returned 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.