Browning Appraisal has answers to "Frequently Asked Questions"
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Browning Appraisal is always willing to elaborate on any inquiries you might have about appraisals or real estate in Frankfort and Franklin County.
Contact Browning Appraisal today to see how we can help solve your valuation problems.
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Define the term "Appraisal"
Describe what an appraiser does
Why would I request services from Browning Appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Upon completion of the report, how can I have a guarantee that the value indicated is trustworthy?
How hard is it to become certified?
Who hires an appraiser?
Where does an appraiser get the data used to estimate values in Franklin County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?
Define the term "Appraisal" (Top)
An appraiser provides an evaluation that leads to an opinion of value.
This opinion or estimate is concluded by a formal method that typically uses the three main "common approaches to value".
One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the depreciation and physical deterioration, plus the land value.
The Sales Comparison Approach involves finding similar homes nearby and figuring out the value based on comparing those properties to the house being investigated.
The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residence.
One of the least common approaches in appraising homes is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the capital produced by the building.
Describe what an appraiser does (Top)
An appraiser forumlates a fair and credible assessment of market value, in the support of real estate exchanges.
Appraisers document their professional investigation in appraisal reports.
Why would I request services from Browning Appraisal? (Top)
There are a lot of reasons to get an appraisal from Browning Appraisal with the most common reason being real estate and mortgage transactions.
A few other reasons for ordering an appraisal include:
- To receive a loan.
- To lower your property taxes.
- To build a case for a homeowner's equity and remove PMI.
- To fight inflated property taxes.
- To handle an estate.
- To give you an edge when purchasing a home.
- To find an honest property value when putting your home on the market.
- To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every home.
- It's possible you could have to deal with being in a lawsuit - an appraisal will help.
For a more detailed description of the appraisal process click here.
Home inspectors do not come to an opinion of value and do not use the same forms as appraisers.
A third-party home inspector will inspect the structure of the property, from the roof to the foundation.
The stereotypical property 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 visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
My agent performed a CMA for me. Is that the same as an appraisal? (Top)
To be honest, they share nothing in common.
The CMA utilizes market trends to generate most of their business.
An appraisal utilizes comparable sales that can be validated by public record.
In addition, the appraisal verifies other factors like condition, neighborhood and construction prices.
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 most significant factor is who's creating the report.
A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends.
A certified, state licensed professional who has formed a career on valuing homes in and around Franklin County is behind the appraisal.
Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for work they perform, regardless of their outcome.
The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
- The client and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
- Relevant property attributes, including: location, physical characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible factors.
- Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- What was included in the activity of completing the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report
Upon completion of the report, how can I have a guarantee that the value indicated is trustworthy? (Top)
In communicating an appraisal report, each appraiser must ensure the following:
- The appraisal contained an apropos analysis of the information.
- Whether individually or collectively, there were no grave errors contained in the report, nor any relevant details left out.
- That appraisal services were not conducted in a careless or negligent fashion.
- That a believable, supportable appraisal report was imparted.
To become a state licensed appraiser, we must meet considerable education and experience requirements that train us to formulate an unbiased opinion.
Plus, appraisers must follow a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
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Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisor.
Once an appraiser is licensed, he or she must then engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.
Who hires an appraiser? (Top)
Mortgage lenders are an appraiser's typical customer, requiring 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 in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Franklin County or other areas? (Top)
One of the most important tasks an appraiser performs is to compile data.
Data can be classified as either Specific or General. Specific data is 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 many places.
Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables.
Tax records and other public documents reveal actual sales prices in a market.
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 service.
And most importantly, the appraiser gathers 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? (Top)
An appraisal is a valuable tool anytime your home's value is pertinent to a financial decision.
For those selling a home, you'll want to determine the 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.
When buying, you can avoid overpaying by commissioning an independent appraisal.
For parties settling an estate or divorce, an appraisal from Browning Appraisal is the best way to ensure assets are split up properly.
A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
What exactly is PMI and how can I get rid of it? (Top)
PMI stands for Private Mortgage Insurance.
It takes care of the lender in case a borrower is unable to pay on the loan and the value of the property is lower than what is owed on the loan.
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.
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The money you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. Nobody is more qualified than Browning Appraisal when it comes to analyzing real estate appreciation in Frankfort and Franklin County. Contact us today.
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Should I do anything in advance of the appraisal appointment (Top)
We start with an inspection of the home.
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.
The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
- Any information on the purchase of the property for the last three years.
- Written property agreements, such as a maintenance agreement for a shared driveway.
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
- Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
What does "Market Value" mean? (Top)
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Does the appraisal belong to the bank or the consumer? (Top)
For mortgage transactions, the lender requests 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 hiring the appraiser for things outside securing a mortgage.
In these situations, the appraiser may stipulate 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.
Which home renovations add the most to the price? (Top)
The added value of a particular amenity truly depends on the local market.
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.
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 weren't far behind, returning 85%.
On the contrary, work that may not increase your value would be painting just for the sake of redecorating.
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