Tatham Appraisal Services, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Back to top) The procedure of writing an appraisal deals with an investigation which forms an opinion of value. This opinion or estimate is concluded by a formal process that usually uses the three main "common approaches to value". The Cost Approach is one of the methods that appraisers use to find value; it involves concluding what the improvements would cost minus physical degradation, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar nearby properties which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
What does an appraiser do?(Back to top) An appraiser generates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers exhibit their analysis in appraisal reports.
What would cause me to request your services?(Back to top) There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
Is an appraisal the same as a comparative market analysis(CMA)?(Back to top) Simply put, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to conduct most of their business. An appraisal relies on comparable sales that can be proven by records. The appraisal report will also contain area and building values. 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.
Who's behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Florida licensed professional who made their livelihood on valuing properties in and around Hillsborough County is behind the appraisal. Further, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (Back to top)The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, how can I have confidence that the final number is trustworthy?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(Back to top) Mortgage lenders are an appraiser's most likely client, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Tatham Appraisal Services, Inc. get the information used to estimate values in Hillsborough County or other areas?(Back to top) One of the most important things an appraiser does is to gather property data. 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 gathered by the appraiser while on site.
General data is received from a many places. To research recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
What can a full appraisal do for me?(Back to top) An appraisal is a valuable tool whenever your home's value is relevant to a financial decision. For those selling a home, you'll want to figure out the 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, be sure you're not overpaying by getting an independent appraisal. 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.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is short for for Private Mortgage Insurance. It takes care of the lender in case a borrower doesn't pay on the loan and the value of the house is lower 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, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
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. 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 included with all the other closing documents - but is not allowed 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 situations, the appraiser may state the purpose of the appraisal; 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?(Back to top) The answer to this is different depending upon the location of the home. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
As a rule, the best ROI from renovating a home comes in the kitchen. 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, something that may not add value would be painting just for the sake of redecorating.