Malechek Appraisal, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(List of questions) The appraisal process is an evaluation that generates an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the house, less the depreciation and physical dilapidation, adding the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which deals with concluding a comparison to comparable houses nearby. The Sales Comparison Approach is commonly the most accurate and clearest indicator of 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?(List of questions) An appraiser provides an unprejudiced and well supported opinion of market value, to be used in making real estate transactions. Appraisers present their conclusions in appraisal reports.
What would cause me to need a real estate appraisal?(List of questions) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the property from basement to top. Generally, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) Frankly, they share nothing in common. What the CMA depends on are superficial trends. An appraisal is based on comparable sales that can be verified by public record. In addition, the appraisal looks at other factors like condition, neighborhood and building prices. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The credentials of the person creating the report is hands down 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, generate CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent voice, with no vested interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (List of questions)The main objective of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the appraisal has been completed, how can I have confidence that the final number is veritable?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Mortgage lenders are an appraiser's typical customer, using their services to ensure property 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 Malechek Appraisal, Inc. get the data used to estimate values in Dallas County or other areas?(List of questions) One of the primary things an appraiser does is to assimilate property data. 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 during an inspection.
General data is received from a many places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. 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 service.
And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(List of questions) An appraisal is a valuable tool whenever the value of your home is relevant to a financial decision. If you're selling your home, an appraisal will help you determine the most appropriate price. 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. 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?(List of questions) PMI is an acronym for Private Mortgage Insurance. It takes care of the lender in case a borrower defaults on the loan and the market price of the home is lower 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 appointment(List of questions) 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 amenities. Inside, pick up any clutter and make sure we can find our way to 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.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(List of questions) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(List of questions) For mortgage transactions, the lender orders 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 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 scenarios, 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 use the appraisal for any purpose.
Which home renovations add the most to the price?(List of questions) The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
As a rule, the most value returned 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, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.