FAQ
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WHAT IS AN APPRAISAL?
The process of creating an appraisal deals with an estimation which forms an opinion of value. The appraiser must use a number of "approaches," typically three, to arrive at the estimation of worth. The Cost Approach is one of the methods that appraisers use to find value; it involves discerning what the improvements would cost less physical deterioration, adding the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves figuring a comparison to similar homes close by. Generally speaking, the Sales Comparison Approach is the most definite indicator of value of a residential property. The Income Approach is primarily used for figuring out the value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
WHAT DOES AN APPRAISER DO?
A key party in finding the value of a property, an appraiser makes an unbiased opinion on the worth of a property used in a real estate sale or for other purposes. A formal investigation is shown by the appraiser in a report.
WHAT IS THE DIFFERENCE BETWEEN AN APPRAISAL AND A HOME INSPECTION?
Home inspectors do not come to an opinion of value and are not appraisers. The point of a home inspection is to investigate the structure of the house from bottom to rooftop. Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
WHY WOULD A PERSON NEED A HOME APPRAISAL?
There are many reasons to purchase an appraisal from Appraisal First LLC with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal report include:
If you are applying for a loan.
To reduce your property taxes.
To officially display the replacement cost of Primary Mortgage Insurance.
To fight inflated property taxes.
If you need to settle an estate.
To offer you a negotiating tool when purchasing real estate.
To figure out a reasonable property value when selling real estate.
To protect your rights in a condemnation case.
Because an official agency such as the IRS requires it.
It's possible you could have to deal with being in a lawsuit - an appraisal will help.
WHAT DOES THE APPRAISAL REPORT CONTAIN?
Each report must reflect a credible estimate of value and must identify the following:
The client and other intended users.
The intended use of the report.
The purpose of the assignment.
The type of value reported and the definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Relevant property characteristics, including location attributes, physical attributes, legal attributes, economic attributes, the real property interest valued, and Non real estate items included in the appraisal, such as personal property, including trade fixtures and intangible items.
All known: easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work used to complete the assignment.
WHAT IS "MARKET VALUE?"
Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, 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: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) 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.