Schoch Appraisals LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Top)An appraisal is a thought process leading to an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to conclude the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the house, less the age and physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which involves discovering a comparable analysis to other similar nearby properties which have recently sold. Being the most common approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residential property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.
Describe what an appraiser does(Top)An appraiser forumlates an unbiased and well substantiated assessment of market value, to be used in making real estate transactions. Appraisers document their professional conclusions in appraisal reports.
Why would someone request a real estate appraisal?(Top)There are a lot of reasons to get an appraisal from Schoch Appraisals LLC with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Top)Frankly, it's night and day. The CMA uses market trends to conduct most of their business. An appraisal is based on comparable sales that can be proven by records. Location and architectural prices are also important in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is who's behind the report. 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. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
After completing the report, what assurance is there that the value conclusion is accurate?(Top)In communicating an appraisal report, each appraiser must ensure the following:
Who employs appraisers?(Top)Mortgage lenders are an appraiser's most likely customer, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in New Castle 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 during an inspection.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers routinely need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other houses in the same market.
What can a full appraisal do for me?(Top)If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. 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 home 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?(Top)PMI stands for Private Mortgage Insurance. It guards the lender in case a borrower defaults on the loan and the value of the home is less than the balance of 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.
Should I do anything in advance of the appraisal appointment(Top)The first step in most appraisals is the property inspection. During this process, we 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. 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 we can get to appliances like furnaces and water heaters.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "Market Value"?(Top)In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(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 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 situations, 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.
I want to get more for my house. Where should I spend money renovating?(Top)The added value of a particular amenity truly depends on the local market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, an improvement that may not increase your value would be painting just for the sake of redecorating.