O'Neil Appraisal, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The appraisal process is an evaluation that produces an opinion of value. This opinion or estimate is concluded by a formal method that typically utilizes three "common approaches to value". The Cost Approach is one of the methods that real estate appraisers use to find value; it involves finding what the improvements would cost minus physical depreciation, plus the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which deals with figuring a comparison to comparable homes close by. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Go to list of questions) An appraiser provides a fair and credible opinion of market value, often in the context of a real estate sale. Appraisers show their expert analysis in appraisal reports.
Why would someone need services from O'Neil Appraisal, LLC?(Go to list of questions) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
How is an appraisal different than a home inspection? (Go to list of questions)Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the home from basement to attic. The standard property inspector's report will include an evaluation of the condition of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible 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, they share nothing in common. The CMA relies on indefinite market trends. The appraisal depends on specific proven comparable sales. The appraisal report will also contain location and building values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is who's doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who made a career on valuing real estate in and around Oakland County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for assignments, regardless of their value conclusion.
What can I expect to see in my appraisal report? (Go to list of questions)The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the appraisal, what guarantee is there that the final number is accurate?(Go to list of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Oakland County or other areas?(Go to list of questions) Gathering data is one of the primary roles of an appraiser. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a many places. To research recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents. Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(Go to list of questions) An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision. When selling your home, an appraisal helps you set the most appropriate price. 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. 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 supplementary plan guards the lender in case a borrower is unable to pay on the loan and the value of the property is less 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.
Does the appraiser need anything from the homeowner in advance?(Go to list of questions) The first step in most appraisals is the home inspection. 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 features. Is there anything you can do to help? Yes there is! First, be sure we have 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. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
Define "Market Value"(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(Go to list of questions) In most real estate transactions, the appraisal is ordered by the lender. 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 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 how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(Go to list of questions) It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.