Brick Appraisals has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal? (Top)An appraisal is an investigation that concludes with an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the depreciation and physical deterioration, adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which involves concluding a comparison to comparable properties nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.
Describe what an appraiser does (Top)An appraiser formulates an objective and well supported assessment of market value, often in the context of a real estate exchange. Appraisers document their expert analysis in appraisal reports.
What would cause me to request services from Brick Appraisals? (Top)There are a lot of reasons to obtain an appraisal from Brick Appraisals with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
What is the difference between an appraisal and a home inspection? (Top)The appraiser is not a home inspector nor does he/she do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the home from bottom to rooftop. The stereotypical property inspector's report will include 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 accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Is an appraisal the same as a comparative market analysis(CMA)? (Top)Frankly, they have nothing in common. What the CMA depends on are superficial trends. An appraisal is based on comparable sales that can be verified by public record. Location and architectural prices are also precedent in an appraisal. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's behind the report is actually the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A Texas licensed professional who bases a career on valuing properties in and around the Austin Area including surrounding areas creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their outcome.
What does the appraisal report contain? (Top)The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the appraisal has been completed, what guarantee is there that the final number is valid? (Top)In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for? (Top)Commonly, appraisers are employed by mortgage lenders to estimate the value of a house involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does Brick Appraisals get the data used to estimate values in Austin area including surrounding areas? (Top)One of the most important tasks an appraiser performs is to collect data. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is received from a number of sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers routinely have 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 assembles 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? (Top)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 figure out a price that gets you the most profit but doesn't leave your home on the market too long; 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. 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? (Top)PMI stands for Private Mortgage Insurance. This added policy protects the lender if a borrower doesn't pay on the loan and the market price of the property is lower than what is owed 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? (Top)We start with an inspection of the property. During this process, we 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 access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "Market Value" (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? (Top)For mortgage transactions, the lender orders 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 certainly entitled to a copy of the report - it's usually included 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 hiring the appraiser for things outside securing a mortgage. In these situations, the appraiser may state how the appraisal can be used; 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.
Are some home improvements more worthwhile than others? (Top)The added value of a particular amenity truly depends on the local 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 best ROI 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 were second, returning 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.