B & J APPRAISALS, INC. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Back to top) The method of creating an appraisal deals with an estimation which leads to an opinion of value. This opinion or estimate is arrived at through a formal method that generally uses three "common approaches to value". The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves discerning what the improvements would cost less physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residential property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.
What does an appraiser do?(Back to top) An appraiser provides a professional, unbiased opinion of market value, in the support of real estate exchanges. Appraisers summarize their expert analysis in appraisal reports.
What would cause me to need services from B & J APPRAISALS, INC.?(Back to top) There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an report include:
Is an appraisal the same as a home inspection? (Back to top)Appraisers do not do provide residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the accessible structure and systems of a property, from the roof to the bottom. Usually, a home inspection report will explain the amenities and the requirements of the house: air conditioning (weather permitting), electrical services, 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 visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) Simply, they share nothing in common. The CMA depends on indefinite local market trends. Appraisals use comparable sales which are verifiable resources. In addition, the appraisal verifies other factors like condition, area and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who made their livelihood on valuing homes in and around Westchester County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the real estate agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (Back to top)Every report must indicate a supported estimate of value and should identify the following:
Once the assignment has been delivered, how can I have confidence that the final number is trustworthy?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(Back to top) Mortgage lenders are an appraiser's most likely customer, needing their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Westchester County or other areas?(Back to top) Collecting information is one of the primary occupations of an appraiser. Data can be described as either 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 places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often need to report when a property is 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 assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
How can a licensed appraiser help me?(Back to top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from B & J APPRAISALS, INC. is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is short for for Private Mortgage Insurance. PMI covers the lender if a borrower doesn't pay on the loan and the value of the home is less than the loan balance. 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?(Back 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, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What is "Market Value?"(Back to top) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Back to 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.
The exception to this rule is when a home owner hires an appraiser directly. 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 do whatever they want with the appraisal.
Which home renovations add the most to the price?(Back to top) It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.