Curiel Appraisal Service has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Return to top) The appraisal process is an estimation that leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or estimate. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, minus depreciation and physical dilapidation, adding the land value. The most common approach in figuring the value of a house is the Sales Comparison Approach which involves figuring a comparison to similar houses nearby. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residence. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
What does an appraiser do?(Return to top) An appraiser generates a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers reveal the details of their expert investigation in appraisal reports.
What would cause me to require your services?(Return to top) There are a lot of reasons to obtain an appraisal from Curiel Appraisal Service with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
How is an appraisal different than a home inspection? (Return to top)The appraiser is not a home inspector and he or she does not do a full home inspection. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a property, from the roof to the bottom. Generally, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, 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 other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Return to top) Simply, they share nothing in common. What the CMA depends on are vague trends. An appraisal utilizes comparable sales that can be verified by public record. Area and construction costs are also important in an appraisal. 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.
But the largest differentiator is who's behind the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their outcome.
What's in an appraisal report? (Return to top)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, you'll usually see the following:
Upon completion of the report, how can I have a guarantee that the final number is legitimate?(Return to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who do appraisers work for?(Return to top) Mortgage lenders are an appraiser's most likely customer, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in El Paso County or other areas?(Return to top) Compiling data is one of the primary roles of an appraiser. Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(Return 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 home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. 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?(Return to top) PMI is the common abbreviation for for Private Mortgage Insurance. PMI protects the lender if a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan. 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.
Does the appraiser need anything from me in advance?(Return to top) The first step in most appraisals is the property inspection. During this process, the appraiser 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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
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?(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns 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 certainly entitled to a copy of the appraisal - it's usually bundled 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 cases, the appraiser may stipulate the purpose of the appraisal; 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?(Return to top) The added value of a particular amenity truly depends on the local market. 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. 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 an oddball for your neighborhood in terms of size.