Caddell Appraisals, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Top) The appraisal process is an estimation that produces an opinion of value. The real estate appraiser must use a several "approaches," typically three, to draw up 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 home, minus age and physical dilapidation, adding the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which concerns concluding a comparison to similar properties close by. The Sales Comparison Approach is commonly the most accurate 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 mainly used to find the value of a property based on what an investor would pay based on the income produced by the building.
Describe what an appraiser does(Top) An appraiser provides a professional, unbiased determination of market value, in the support of real estate exchanges. Appraisers exhibit their professional analysis in appraisal reports.
What are the reasons someone would need a real estate appraisal?(Top) There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Top) Frankly, it's like comparing broadband and dial-up. The CMA relies on indistinct trends in the market. The appraisal is based on specific valid comparable sales. Also, the appraisal verifies other factors like condition, location and replacement costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is the person behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the value of the home.
After completing the appraisal, how can I have assurance that the value indicated is accurate?(Top) In communicating an appraisal report, 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 most likely customer, using 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 hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Larimer County or other areas?(Top) Collecting data is one of the primary tasks an appraiser performs. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a many places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
Why do I need a professional appraisal?(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 also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Caddell Appraisals, Inc. is the best documentation to ensure assets are split up properly. 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?(Top) PMI stands for Private Mortgage Insurance. It protects the lender if a borrower doesn't pay on the loan and the market price of the property is less than the loan balance. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal appointment(Top) The first step in most appraisals is the home 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. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
How does an appraiser define "Market Value"?(Top) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(Top) 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 bundled with all the other closing documents - but is not entitled 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 define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Top) A home's location - what city it is in and even what part of that city - is key to this popular question. 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. 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, returning 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.