© 2011 A1 Appraisal Service Made with Xara A1 Appraisal Service Call (360) 909-1499 A1 Appraisal Service has answers to "Frequently Asked Questions" A1 Appraisal Service is always happy to talk to you about any inquiries you might have about appraisals or real estate in Oregon or Washington. Contact us today to learn how we can help solve your specific valuation problems. Define the term "Appraisal" Describe what an appraiser does Why would I need your services? What is the difference between an appraisal and a home inspection? Is an appraisal the same as a comparative market analysis (CMA)? What's in an appraisal report? Upon completion of the appraisal, how can I have certainty that the value indicated is valid? What are the requirements to be a Licensed Appraiser? Who do appraisers work for? Where does A1 Appraisal Service get the information used to estimate values in Clark County or other areas? Why should I hire a Licensed Appraiser? What exactly is PMI and how can I get rid of it? How do I get ready for the appraiser? Define "Market Value" Does the appraisal belong to the bank or the consumer? How can I get the most ROI out of home improvements? Define the term "Appraisal"   The appraisal process is an evaluation that leads to an opinion of value. The appraiser will use a several "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the property, minus age and physical deterioration, adding the land value. The Sales Comparison Approach deals with searching for comparable properties in the vicinity and discovering the value based on comparing those homes to the house being appraised. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a likely sales price for a residential property. The third approach is the Income Approach, which is the most important 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   An appraiser produces a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers reveal the details of their analysis in appraisal reports. Why would I need your services?   There are a lot of reasons to order an appraisal from A1 Appraisal Service with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include: •To get a loan. •To lower your property taxes. •To show a homeowner has 30% equity and remove Primary Mortgage Insurance. •To contest high property taxes. •If you need to settle an estate. •To provide you a negotiating tool when purchasing real estate. •To figure out an honest sales price when putting your home on the market. •To ensure parties are provided just compensation in eminent domain cases. •Because an official agency such as the IRS requires it. •If you are ever involved in a civil case. What is the difference between an appraisal and a home inspection?   The appraiser is not a home inspector and does not do a full home inspection. A third-party home inspector will inspect the structure of the property, from the roof to the foundation. The stereotypical home inspector's report will include an evaluation of the integrity of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure. Is an appraisal the same as a Comparative Market Analysis (CMA)?   Frankly, they have nothing in common. The CMA relies on indistinct local market trends. Appraisals use similar sales which are verifiable resources. Location and building prices 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 credentials of the person creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their outcome. What's in an appraisal report?   Every appraisal should indicate a supported value opinion and will identify the following: •The client and other intended users. •The intended use of the report. •The reason for the appraisal. •Precisely what "value" attribute is being reported and what that value means. •The effective date of the appraiser's opinions and conclusions. •Pertinent property attributes, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non- real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible considerations. •Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature. •Division of interest, such as fractional interest, physical segment and partial holding. •What was involved in the activity of completing the assignment. For a more in depth view of what goes into an appraisal report contact A1 Appraisal Service Upon completion of the appraisal, how can I have certainty that the value indicated is valid?   In communicating an appraisal report, each appraiser must see to it that each of the items below are covered: •That the information analysis contained in the appraisal was suitable. •That substantial errors of omission or commission were not committed individually or collectively. •That appraisal services were provided in a careful and conscientious manner. •That a believable, substantiated appraisal report was conferred. What are the requirements to be a Licensed Appraiser? There are intense education and real world experience requirements that must be satisfied in order to achieve the title of "Licensed Appraiser" in Oregon and Washington. Likewise, appraisers must follow a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP). Licensing and certification is achieved through coursework, tests and real world experience. Once an appraiser is licensed, he or she must then take continuing education courses so that the license doesn't expire. Who do appraisers work for?   Mortgage lenders are an appraiser's typical customer, using 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 hire appraisers for asset division and estate settlements. Where does A1 Appraisal Service get the information used to estimate values in the market areas?   Compiling data is one of the main things an appraiser performs. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site. General data is gathered from a numerous sources. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers. And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market. Why should I hire a state licensed appraiser?   Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from A1 Appraisal Service is the best documentation to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions. What exactly is PMI and how can I get rid of it?   PMI is the common abbreviation for for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the value of the house 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. Is PMI a line item in your monthly mortgage payment? Call A1 Appraisal Service today at 360-909-1499 or send us an e-mail. A current appraisal could save you thousands. How do I get ready for the appraiser?   The first step in most appraisals is the home 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 status of its features. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any landscaping and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters and access to all rooms of the home. You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand: •A plot plan or survey of the house and land (if readily available). •Title policy that lists encroachments or easements. •Information on "Homeowners Associations" or condominium covenants and fees. •A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available). •A bill for your most recent real estate taxes which should also contain a legal description of the property. Define "Market Value"   In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as: "The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." Does the appraisal belong to the bank or the consumer?   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 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. The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state 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. How can I get the most ROI out of home improvements?   The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes 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 weren't far behind, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.