Keys & Associates has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) The process of performing an appraisal report consists of an evaluation which forms an opinion of value. There are three "common approaches to value" which assists the real estate 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 property, minus age and physical dilapidation, plus the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which concerns figuring a comparison to similar properties nearby. The Sales Comparison Approach is normally the most definitive and best indicator of 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.
What does an appraiser do?(List of questions) An appraiser generates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers exhibit their investigation in appraisal reports.
What would cause me to require services from Keys & Associates?(List of questions) There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal report include:
Is an appraisal the same as a home inspection? (List of questions)The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. Usually, a home inspection report will explain the amenities and the requirements of the house: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) Frankly, they share nothing in common. What the CMA depends on are superficial trends. Appraisals use similar sales which are verifiable resources. Area and architectural prices are also a priority in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person behind the report is hands down the most significant 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, Colorado licensed professional who bases their livelihood on valuing properties in and around Weld County creates the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (List of questions)The main point of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
After completing the report, how can I have a guarantee that the value indicated is valid?(List of questions) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(List of questions) Commonly, appraisers are hired by mortgage lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Keys & Associates get the data used to estimate values in Weld County or other areas?(List of questions) One of the most important things an appraiser does is to collect property data. Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a variety of places. To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. 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 product.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(List of questions) An appraisal is a worthwhile whenever your home's value is pertinent to some financial decision. When selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Keys & Associates is the best way to ensure assets are divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI stands for Private Mortgage Insurance. PMI guards the lender in the event a borrower defaults on the loan and the value of the house is less 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.
How do I get ready for the appraiser?(List of questions) 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, pick up any clutter and make sure we can access 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.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What does "Market Value" mean?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who actually owns the appraisal report?(List of questions) 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 bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.
This rule doesn't apply when a home owner hires an appraiser directly. 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.
Which home renovations add the most to the price?(List of questions) It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 were second, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.