Adamovich Appraisals has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) An appraisal report is an estimation that concludes with an opinion of value. This opinion or estimate is concluded by using a formal method that typically utilizes the three main "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the depreciation and physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which deals with finding a comparison to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most definitive and best indicator of value for a house. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the income generated by the property.
What does an appraiser do?(Top) An appraiser generates a professional, unbiased assessment of market value, to be used in making real estate transactions. Appraisers exhibit their professional conclusions in appraisal reports.
Why would someone need a real estate appraisal?(Top) There are a lot of reasons to purchase an appraisal from Adamovich Appraisals with the most common reason being real estate and mortgage transactions. A few other reasons for getting an report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Top) To be blunt, it's night and day. The CMA depends on indistinct trends in the market. Appraisals use similar sales which are valid resources. Location and construction prices are also a priority in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the value of the home.
Upon completion of the report, what assurance is there that the final number is accurate?(Top) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Top) Mortgage lenders are an appraiser's most likely client, 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 data used to estimate values in Vilas County or other areas?(Top) Collecting data is one of the main things an appraiser engages in. Data can be divided into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a numerous places. To look up 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. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
What can a full appraisal do for me?(Top) An appraisal is a valuable tool whenever the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine 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. When buying, you can avoid overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Adamovich Appraisals is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Top) PMI is short for for Private Mortgage Insurance. This additional plan covers the lender in case 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 can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
Should I do anything in advance of the appraisal inspection(Top) 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. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping 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:
How does an appraiser define "Market Value"?(Top) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Top) 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 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 cases, the appraiser may stipulate 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.
How can I get the most ROI out of home improvements?(Top) A home's location - what city it is in and even what part of that city - is key to this popular question. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
As a rule, the best ROI from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms weren't far behind, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.