Champagne Appraisal Services has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The process of creating an appraisal report consists of an evaluation which forms an opinion of value. The appraiser will use a number of "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves discerning what the improvements would cost without physical degradation, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residential property. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
Describe what an appraiser does(Back to top) An appraiser produces a professional, unbiased determination of market value, in the support of real estate transactions. Appraisers show their expert analysis in appraisal reports.
What would cause me to require your services?(Back to top) There are a lot of reasons to get an appraisal from Champagne Appraisal Services with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) Honestly, they share nothing in common. The CMA depends on indefinite market trends. Appraisals use comparable sales which are valid resources. Area and building values are also precedent in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
The person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no conditional 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? (Back to top)The main purpose of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the appraisal, how can I have confidence that the final number is legitimate?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who employs appraisers?(Back to top) Most of the time, appraisers are employed by mortgage lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Champagne Appraisal Services get the data used to estimate values in Butler County or other areas?(Back to top) Collecting information is one of the main tasks an appraiser does. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is collected from a number of places. To research recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers often need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(Back to top) If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Champagne Appraisal Services is the best documentation to ensure assets are split up evenly. Simply put, a home 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?(Back to top) PMI stands for Private Mortgage Insurance. This supplementary plan guards the lender in case a borrower is unable to pay on the loan and the market price of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal inspection(Back to top) We start with an inspection of the home. During this process, we 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 find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"?(Back to top) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Back to top) In most real estate transactions, the appraisal is ordered by the lender. 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 entitled to a copy of the report - 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 engages an appraiser directly. In these cases, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(Back to top) Like all things real estate, this is dependent on a home's location. 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 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 are right up there with kitchens, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.