Carol Caffey Owen Appraiser has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) An appraisal is an estimation that concludes with an opinion of value. The appraiser must use a number of "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the approaches that appraisers use to find value; it involves discerning what the improvements would cost minus physical depreciation, plus the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which involves making a comparison to similar houses close by. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of 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 income a property produce.
Describe what an appraiser does(Go to list of questions) An appraiser forumlates a professional, unbiased assessment of market value, in the support of real estate exchanges. Appraisers reveal the details of their expert findings in appraisal reports.
What are the reasons a person would need a real estate appraisal?(Go to list of questions) There are a lot of reasons to purchase an appraisal from Carol Caffey Owen Appraiser with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)The appraiser is not a home inspector nor does he/she do a complete home inspection. A third-party home inspector will investigate the structure of the property, from the roof to the foundation. The stereotypical house inspector's report will contain an evaluation of the integrity of the home's heating systems, 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)?(Go to list of questions) Frankly, it's apples and oranges. The CMA relies on vague market trends. The appraisal is reliant on similar verifiable comparable sales. The appraisal report will also contain location and construction values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The person behind the report is frankly the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, Texas licensed professional who has formed their livelihood on valuing real estate in and around Tarrant County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their value conclusion.
What are the contents of an appraisal report? (Go to list of questions)Every report should reflect a supported value opinion and should document the following:
Upon completion of the appraisal, what assurance is there that the final number is veritable?(Go to list of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Go to list of questions) Mortgage lenders are an appraiser's most likely client, requiring their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Tarrant County or other areas?(Go to list of questions) One of the main tasks an appraiser performs is to collect data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is gathered from a numerous places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. To verify actual sales prices, we research tax records and other public documents. Appraisers often have 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 last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
What can a full appraisal do for me?(Go to list of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal helps you set the most appropriate price. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Carol Caffey Owen Appraiser is the best way to ensure assets are split up fairly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental plan 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. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(Go to list of questions) The first step in most appraisals is the home inspection. During this process, the appraiser 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 find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "Market Value"?(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(Go to 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.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may stipulate the purpose of the appraisal; 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?(Go to list of questions) It really depends on the 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 most value returned 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, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.