Appraisal Associates of Douglas County has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top) The appraisal process is an estimation that generates an opinion of value. This opinion or estimate is discerned using a formal process that generally uses three "common approaches to value". One of the three is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns finding a comparison to other similar nearby properties which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Return to top) An appraiser generates a fair and credible determination of market value, often in the context of a real estate exchange. Appraisers summarize their expert investigation in appraisal reports.
What would cause me to require services from Appraisal Associates of Douglas County?(Return to top) There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
How is an appraiser different than a home inspector? (Return to top)Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and mechanical systems of a property, from the roof to the foundation. The general property inspector's report will contain an evaluation of the condition of the house'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.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Return to top) To be blunt, it's apples and oranges. The CMA depends on indistinct local market trends. Appraisals use comparable sales which are verifiable resources. The appraisal report will also contain location and construction costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
Who's behind the report is hands down the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Oregon licensed professional who made a career on valuing real estate in and around Douglas County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
What does the appraisal report contain? (Return to top)The main purpose of an appraisal report 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 certainty that the value conclusion is veritable?(Return to top) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who are an appraiser's customers?(Return to top) Most of the time, appraisers are called upon by mortgage lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Douglas County or other areas?(Return to top) One of the most important activities of an appraiser is to collect data. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a many places. To find out about recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers routinely need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Return to top) An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, you can avoid overpaying by getting an independent appraisal. For people settling an estate or divorce, an appraisal from Appraisal Associates of Douglas County 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.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is an acronym for Private Mortgage Insurance. It takes care of the lender if a borrower doesn't pay on the loan and the value of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(Return to top) We begin with an inspection of the home. 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. Inside, 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.
You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(Return to top) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Return to top) For mortgage transactions, the lender requests 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 allowed 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 situations, the appraiser may stipulate 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.
I want to get more for my house. Where should I spend money renovating?(Return to top) It really depends on the 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
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.