Mike Sherfey Appraisals, LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Return to top) An appraisal is an inspection leading to an opinion of value. There are three "common approaches to value" which assists the appraiser conclude this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical deterioration, plus the land value. The Sales Comparison Approach involves finding similar properties in close proximity and figuring out the value based on making a comparison of those properties to the property being appraised. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.
Describe what an appraiser does(Return to top) An appraiser generates a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers reveal the details of their professional investigation in appraisal reports.
What are the reasons I would need a real estate appraisal?(Return to top) There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
How is an appraisal different than a home inspection? (Return to top)Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the property from foundation to rooftop. The archetypal home inspector's report will include an evaluation of the condition of the property'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)?(Return to top) To be honest, they share nothing in common. What the CMA relies upon are superficial trends. An appraisal relies on comparable sales that can be validated by records. The appraisal report will also contain area and construction costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is frankly the biggest difference between a CMA and an appraisal. 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 a career on valuing homes in and around Page County creates the appraisal. Moreover, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the agent, whose income is tied to the price of the home.
What are the contents of an appraisal report? (Return to top)Each appraisal should reflect a believable value opinion and should clearly state the following:
After completing the report, what assurance is there that the value conclusion is trustworthy?(Return to top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires Mike Sherfey Appraisals, LLC(Return to top) Commonly, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Mike Sherfey Appraisals, LLC get the information used to estimate values in Page County or other areas?(Return to top) Compiling information is one of the main tasks an appraiser performs. 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 sources. To research recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents. Appraisers often need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
How can a licensed appraiser help me?(Return to top) If you're involved in any kind of financial decision and the value of your home matters, you'll want an appraisal. If you're selling your home, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Mike Sherfey Appraisals, LLC is the best way to ensure assets are split up evenly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is short for for Private Mortgage Insurance. It protects the lender if a borrower defaults on the loan and the market price of the property is lower than what is owed on 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?(Return to top) 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 status of its features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
What does "Market Value" mean?(Return to top) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Return to top) In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the appraisal - it's usually bundled 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 scenarios, the appraiser may define 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.
Which home renovations add the most to the price?(Return to top) This really depends on where the home is. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 were second, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.