Blue Star Appraisals Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The procedure of writing an appraisal consists of an inspection which forms an opinion of value. This opinion or estimate is discerned using a formal method that generally utilizes the three main "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find the value of a house; it involves discerning what the improvements would cost less physical deterioration, plus the land value. The Sales Comparison Approach deals with finding similar homes in the vicinity and discovering the value based on comparing those homes to the home being investigated. Being the most common approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residence. One of the least common approaches in appraising houses 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 income produced by the building.
What does an appraiser do?(See list of FAQ's) An appraiser offers an impartial and well substantiated assessment of market value, often in the context of a real estate sale. Appraisers show their expert findings in appraisal reports.
What would cause me to request services from Blue Star Appraisals Inc.?(See list of FAQ's) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an report include:
How is an appraiser different than a home inspector? (See list of FAQ's)Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. An inspection is a third-party evaluation of the available structure and appliances of a house, from the roof to the bottom. The stereotypical property inspector's report will contain an evaluation of the condition of the property'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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) Simply put, it's night and day. The CMA utilizes market trends to generate most of their business. An appraisal utilizes comparable sales that can be verified by records. The appraisal report will also include area and building prices. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. 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 accept a previously agreed upon sum for work they perform, regardless of their value conclusion.
What's in an appraisal report? (See list of FAQ's)The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, how can I have assurance that the final number is trustworthy?(See list of FAQ's) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(See list of FAQ's) Mortgage lenders are an appraiser's most likely client, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Blue Star Appraisals Inc. get the information used to estimate values in Dallas County or other areas?(See list of FAQ's) Gathering information is one of the primary occupations of an appraiser. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Blue Star Appraisals Inc. is the best way to ensure assets are split up 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?(See list of FAQ's) PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes 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.
How do I get ready for the appraiser?(See list of FAQ's) The first step in most appraisals is the property 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 condition of its features. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
What does "Market Value" mean?(See list of FAQ's) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) 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 state 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?(See list of FAQ's) 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. 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, returning 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 an oddball for your neighborhood in terms of size.