TNT Appraisals & Home Inspections, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Return to top) An appraiser provides an evaluation that produces an opinion of value. The real estate appraiser will use a few "approaches," typically three, to come to the estimation of market value. One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a home. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to determine 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(Return to top) An appraiser generates an unbiased and well substantiated assessment of market value, to be used in making real estate transactions. Appraisers document their professional investigation in appraisal reports.
What would cause me to require a real estate appraisal?(Return to top) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal report include:
How is an appraisal different than a home inspection? (Return to top)Home inspectors do not provide an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the available structure and systems of a property, from the top to the foundation. Usually, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Return to top) Simply put, it's like comparing opera to country. What the CMA relies upon are superficial trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include neighborhood and building costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
Who's creating the report is hands down the biggest 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. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their outcome.
What are the contents of an appraisal report? (Return to top)Each report should indicate a believable estimate of value and will identify the following:
Once the report has been completed, how can I have a guarantee that the final number is valid?(Return to top) In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers?(Return to top) Commonly, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does TNT Appraisals & Home Inspections, Inc. get the information used to estimate values in Cuyahoga County or other areas?(Return to top) Compiling information is one of the main tasks an appraiser does. Data can be categorized as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a variety of sources. To find out about recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
What can a full appraisal do for me?(Return to top) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. When selling your house, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from TNT Appraisals & Home Inspections, Inc. is the best way to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Return to top) PMI is the common abbreviation for for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the market price of the house is less than the loan balance. 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 inspection(Return to top) The first step in most appraisals is the property 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 status of its amenities. Inside, pick up any clutter and make sure we can get 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 our visit go faster and improve the quality of the appraisal report by having the following things on hand:
How does an appraiser define "Market Value"?(Return to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Return to 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 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 scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Return to top) Like all things real estate, this is dependent on a home's location. 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 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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.