Madison Laine Assoc Inc has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) An appraisal report is an investigation allowing the appraiser to come to an opinion of value. This opinion or estimate is figured using a formal method that usually uses three "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find value; it involves figuring what the improvements would cost minus physical deterioration, plus the land value. The most common approach in figuring the value of a home is the Sales Comparison Approach which concerns concluding a comparison to similar houses nearby. The Sales Comparison Approach is commonly the most accurate and best indicator of value for a home. One of the least common approaches in appraising residential properties 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.
Describe what an appraiser does(Top) An appraiser generates an unprejudiced and well justified opinion of market value, often in the context of a real estate exchange. Appraisers present their professional conclusions in appraisal reports.
Why would I request a real estate appraisal?(Top) There are a lot of reasons to obtain an appraisal from Madison Laine Assoc Inc with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Frankly, they have nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use comparable sales which are valid resources. Location and architectural costs are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The credentials of the person creating the report is actually 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, create CMA's. A certified, state licensed professional who made their livelihood on valuing properties in and around Okaloosa County creates the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
After completing the report, how can I have certainty that the value indicated is accurate?(Top) In the documentation of an appraisal, each appraiser must make sure of the following:
Who hires Madison Laine Assoc Inc(Top) Mortgage lenders are an appraiser's most likely client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Okaloosa County or other areas?(Top) Gathering data is one of the primary functions of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we research tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(Top) If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out the 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house 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?(Top) PMI stands for Private Mortgage Insurance. This added policy takes care of the lender in case a borrower defaults on the loan and the value of the house 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.
Does the appraiser need anything from me in advance?(Top) We start with an inspection of the property. 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, pick up any clutter and make sure we can access 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.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"?(Top) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(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.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(Top) The added value of a particular amenity truly depends on the local 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
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, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.