Taylor Appraisal Service has answers to "Frequently Asked Questions"
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Taylor Appraisal Service is always happy to handle any inquiries you might have about appraisals in Marshall County.
Don't hesitate to contact us today.
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What is an appraisal?
Describe what an appraiser does
What would cause me to request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Upon completion of the appraisal, what assurance is there that the value indicated is accurate?
How are appraisers certified?
Who hires an appraiser?
Where does Taylor Appraisal Service get the data used to estimate values in Marshall County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?
What is an appraisal? (List of questions)
An appraisal is an estimation that concludes with an opinion of value.
There are three "common approaches to value" which assists the real estate appraiser come to this opinion or estimate.
One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value.
Another of the processes is the Sales Comparison Approach - which involves discovering a comparable analysis to other similar properties within a close proximity which have recently sold.
The Sales Comparison Approach is normally the most definitive and best indicator of a liklely sales price for a residence.
One of the least common approaches in appraising residential properties is the Income Approach, which is generally used to find the value of a property based on what an investor would pay based on the income produced by the property.
Describe what an appraiser does (List of questions)
An appraiser offers a professional, unbiased assessment of market value, in the support of real estate exchanges.
Appraisers exhibit their findings in appraisal reports.
What would cause me to request a real estate appraisal? (List of questions)
There are a lot of reasons to get an appraisal from Taylor Appraisal Service with the usual reason being real estate and mortgage transactions.
Some other reasons for getting an appraisal include:
- To receive a loan.
- If you would like to reduce your property tax obligations.
- To show a homeowner has 30% equity and remove insurance.
- To fight improperly assessed property taxes.
- If you need to settle an estate.
- To offer you an edge when purchasing a home.
- To determine an honest sales price when selling your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every home.
- It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more detailed explanation of the process about getting an appraisal.
Appraisers do not do complete home inspections and are not home inspectors.
The purpose of a home inspection is to investigate the structure of the house from bottom to attic.
The stereotypical house inspector's report will include an evaluation of the integrity of the property'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.
My agent performed a CMA for me. Is that the same as an appraisal? (List of questions)
To be honest, they have nothing in common.
The CMA uses market trends to create most of their business.
An appraisal utilizes comparable sales that can be verified by public record.
Also, the appraisal looks at other factors like condition, location and replacement costs.
All a CMA does is generate a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person creating the report is frankly the most significant difference between a CMA and an appraisal.
Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation.
A certified, state licensed professional who has formed a career on valuing real estate in and around Marshall County creates the appraisal.
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 previously agreed upon fee for work they perform, regardless of their outcome.
The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
- Who engaged the appraiser and other intended users.
- The intended use of the appraisal.
- The purpose of the appraisal.
- The type of value contained and a definition of the value reported.
- The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
- Pertinent property characteristics, 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 entailed in the process of completing the assignment.
For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report
Upon completion of the appraisal, what assurance is there that the value indicated is accurate? (List of questions)
In communicating an appraisal report, each appraiser must ensure the following:
- That the information analysis implemented in the appraisal was appropriate.
- That substantial errors of omission or commission were not committed individually or collectively.
- That appraisal services were done in a careful and conscientious manner.
- That a credible, supportable appraisal report was communicated.
There are intense education and experience requirements that must be met in order to achieve the status of "licensed appraiser" in Alabama.
Likewise, appraisers must stick to a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(List of questions)
Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and practical experience.
Once licensed, he or she must then complete continuing education courses so the license stays current. To see the specific requirements for any state click here.
Who hires an appraiser? (List of questions)
Typically, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction - to make sure the house is truly adequate collateral for the loan.
Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Taylor Appraisal Service get the data used to estimate values in Marshall County or other areas? (List of questions)
One of the main tasks an appraiser performs is to compile property data.
Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is received from a numerous sources.
To look up recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service.
Tax records and other public documents reveal actual sales prices in a market.
Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
How can a licensed appraiser help me? (List of questions)
If you're involved in some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser.
If you're selling your house, an appraisal will help you determine the most appropriate price.
When buying, you can avoid overpaying by getting an independent appraisal.
If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly.
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? (List of questions)
PMI is an acronym for Private Mortgage Insurance.
This additional plan covers the lender if a borrower doesn't pay on the loan and the market price of the home is less than what is owed on the loan.
Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
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The savings from cancelling the PMI required when you got your mortgage pays for the appraisal in a matter of months. Taylor Appraisal Service is a name you can trust when it comes to real estate value trends in Albertville and Marshall County. Contact us today.
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Should I do anything in advance of the appraisal appointment (List of questions)
We start with an inspection of the property.
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.
Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
- Any information on the purchase of the property for the last three years.
- Written property agreements, such as a maintenance easement for a shared driveway.
- Title policy that describes encroachments or easements.
- Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
- Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
How does an appraiser define "Market Value"? (List of questions)
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."
Who actually owns the appraisal report? (List of questions)
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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage.
In these cases, the appraiser may state 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.
Are some home improvements more worthwhile than others? (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 best ROI 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 were second, returning 85%.
On the contrary, something that may not add value would be painting just for the sake of redecorating.
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