Hughes Appraisal Group has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The procedure of producing an appraisal report deals with an investigation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or estimate. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the house, minus age and physical deterioration, plus the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which involves making a comparison to similar homes nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(Return to top) An appraiser generates a professional, unbiased determination of market value, often in the context of a real estate exchange. Appraisers illustate their expert conclusions in appraisal reports.
What are the reasons I would need services from Hughes Appraisal Group?(Return to top) There are many reasons to order an appraisal from Hughes Appraisal Group with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an report include:
Is an appraisal the same as a home inspection? (Return to top)The appraiser is not a home inspector nor does he/she do a complete home inspection. The purpose of a home inspection is to investigate the structure of the property from bottom to attic. The archetypal property inspector's report will contain an evaluation of the integrity of the property's heating system, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(Return to top) To be blunt, it's night and day. The CMA depends on vague local market trends. The appraisal relies on specific verifiable comparable sales. The appraisal report will also include location and building costs. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The credentials of the person behind the report is frankly 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 certified, Massachusetts licensed professional who bases their livelihood on valuing homes in and around Middlesex County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their outcome.
What can I expect to see in my appraisal report? (Return to top)The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the appraisal has been completed, how can I have assurance that the final number is trustworthy?(Return to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(Return to top) Most of the time, appraisers are called upon by lenders to render a value opinion on property involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does Hughes Appraisal Group get the information used to estimate values in Middlesex County or other areas?(Return to top) Compiling information is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is gathered from a number of places. To find out about recent sales to be used as "comps", we often use the local Multiple Listing Service. 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, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
What can a full appraisal do for me?(Return to top) If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. 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. For parties settling an estate or divorce, an appraisal from Hughes Appraisal Group is the best way to ensure assets are split up fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Return to top) PMI stands for Private Mortgage Insurance. It takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than the balance of 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.
Do you need anything from the homeowner in advance?(Return to top) We begin 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any landscaping and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can get to items 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"(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Return 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 entitled to a copy of the appraisal - it's usually included 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may state the purpose of the appraisal; 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.
Which home renovations add the most to the price?(Return to top) Like all things real estate, this is dependent on a home's location. 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.
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 were second, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.