Smith & Connerley has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Top) An appraisal report is a thought process that concludes with an opinion of value. The appraiser must use a several "approaches," typically three, to come to the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the home, minus age and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with making a comparison to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is generally used for finding 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(Top) An appraiser produces a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers illustate their expert findings in appraisal reports.
What are the reasons a person would need services from Smith & Connerley?(Top) There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Top) Simply, they share nothing in common. The CMA utilizes market trends to create most of their business. The appraisal is reliant on similar definite comparable sales. The appraisal report will also include area and building values. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is who's creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, state licensed professional who bases their livelihood on valuing homes in and around Johnson County is behind the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
Upon completion of the report, what assurance is there that the value conclusion is legitimate?(Top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for?(Top) Mortgage lenders are an appraiser's typical customer, requiring their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Smith & Connerley get the data used to estimate values in Johnson County or other areas?(Top) One of the most important activities of an appraiser is to collect property data. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is gathered from a numerous sources. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other courthouse 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 service.
And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.
How can a licensed appraiser help me?(Top) An appraisal is a worthwhile whenever your home's value is pertinent to some financial decision. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Smith & Connerley is the best way to ensure assets are split up evenly. 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?(Top) PMI is the common abbreviation for for Private Mortgage Insurance. It takes care of the lender in case a borrower defaults on the loan and the value of the home is less 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.
Should I do anything in advance of the appraisal inspection(Top) 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 condition of its features. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What is "Market Value?"(Top) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Top) 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 allowed to use the report for any other purpose without permission from the lender.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Top) It really depends on the market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.