Brick Appraisals has answers to "Frequently Asked Questions"
|Brick Appraisals is always ready to talk to you about any questions you might have about appraisals in the Austin ares and surrounding Cities.
Feel free to contact us today.
What is an appraisal?
Describe what an appraiser does
What would cause me to request services from Brick Appraisals?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the appraisal has been completed, what guarantee is there that the final number is valid?
What are the requirements to be a certified appraiser?
Who do appraisers work for?
Where does Brick Appraisals get the data used to estimate values in the Austin area and surrounding cities and counties?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?
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.
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.
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:
Click here for a more detailed explanation of the process about getting an appraisal.
- If you are applying for a loan.
- If you would like to reduce your property tax obligations.
- To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
- To fight inflated property taxes.
- If you need to settle an estate.
- To give you an edge when purchasing a home.
- To figure out an honest price when putting your home on the market.
- To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
- Because an official agency such as the IRS requires it.
- It's possible you could be involved in a lawsuit - an appraisal will definitely help.
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.
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.
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:
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report
- Who engaged the appraiser and whose purposes the appraisal is to serve.
- The intended use of the appraisal.
- The purpose of the appraisal.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
- Pertinent property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
- Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- What was involved in the activity of completing the job.
In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
To become a state licensed appraiser, there are strenuous education requirements as well as experience that must be attained - all with the objective of being able to provide unbiased value opinions.
Likewise, appraisers must obey a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis contained in the appraisal was suitable.
- That crucial errors of omission or commission were not committed individually or collectively.
- That appraisal services were done in a careful and judicious fashion.
- The final appraisal report was easy to explain, sound and conclusive.
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and experience working under a supervisor.
Once an appraiser is licensed, he/she must then complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.
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.
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.
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.
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.
Is PMI a lineitem in your monthly mortgage payment? Call Brick Appraisals today at 909-230-2982 or send us an e-mail. Documentation of your home's current value could save you thousands.
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:
- Records on the latest purchase of the property in the last three years.
- Written property agreements, such as a maintenance easement for a shared driveway.
- Title policy that lists encroachments or easements.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
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.
The added value of a particular amenity truly depends on the local market.
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.