Michiana Appraisals, LLC. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top) The method of producing an appraisal report consists of an investigation which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the home, minus depreciation and physical dilapidation, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable houses nearby. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.
Describe what an appraiser does(Top) An appraiser provides an impartial and well supported opinion of market value, often in the context of a real estate sale. Appraisers show their professional analysis in appraisal reports.
Why would someone need a real estate appraisal?(Top) There are many reasons to purchase an appraisal from Michiana Appraisals, LLC. with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:
My agent performed a CMA for me. Is that the same as an appraisal?(Top) Frankly, they have nothing in common. What the CMA depends on are superficial trends. An appraisal utilizes comparable sales that can be validated by public record. In addition, the appraisal looks at other factors like condition, area and building prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is who's behind the report. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who has formed a career on valuing real estate in and around St Joseph County is behind the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
Upon completion of the appraisal, what assurance is there that the final number is trustworthy?(Top) In communicating an appraisal report, each appraiser must ensure the following:
Who hires an appraiser?(Top) Mortgage lenders are an appraiser's most likely client, requesting their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Michiana Appraisals, LLC. get the information used to estimate values in St Joseph County or other areas?(Top) Compiling data is one of the primary tasks an appraiser performs. Data can be categorized as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records and other public documents. Appraisers often 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 product.
And most importantly, the appraiser assembles 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?(Top) If you're involved in any kind of financial decision and the value of your home matters, you'll want a full appraisal. If you're selling your home, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Top) PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender in case a borrower is unable to pay on the loan and the market price of the house is less than the balance of 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.
Should I do anything in advance of the appraisal inspection(Top) We start with an inspection of the home. 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. Inside, 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 exterior walls.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
What is "Market Value?"(Top) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Top) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.
The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Top) The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 were second, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.