GK Appraisal, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The process of creating an appraisal report deals with an estimation which leads to an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or valuation. The Cost Approach is one of the processes that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach deals with searching for similar houses in the vicinity and figuring out the value based on making a comparison of those properties to the house being investigated. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a residence. One of the least common approaches in appraising houses is the Income Approach, which is commonly 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(Go to list of questions) An appraiser produces a fair and credible assessment of market value, often in the context of a real estate purchase. Appraisers document their conclusions in appraisal reports.
Why would a person need services from GK Appraisal, Inc.?(Go to list of questions) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for getting an appraisal include:
Is an appraisal the same as a home inspection? (Go to list of questions)Home inspectors do not produce an opinion of value and do not do appraisal reports. The purpose of a home inspection is to evaluate the structure of the house from basement to rooftop. The standard house inspector's report will include an evaluation of the integrity of the house's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions) Simply put, it's apples and oranges. What the CMA relies upon are vague trends. An appraisal relies on comparable sales that can be validated by records. Area and building values are also a priority in an appraisal. 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 actually 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 bear specific competence when it comes to home valuation. A certified, New York licensed professional who has formed their livelihood on valuing homes in and around Dutchess County is behind the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
What does the appraisal report contain? (Go to list of questions)The main purpose of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
Upon completion of the appraisal, how can I have a guarantee that the final number is trustworthy?(Go to list of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for?(Go to list of questions) Mortgage lenders are an appraiser's typical 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 in litigation cases, tax matters and investment decisions.
Where does GK Appraisal, Inc. get the data used to estimate values in Dutchess County or other areas?(Go to list of questions) Compiling data is one of the primary occupations of an appraiser. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a many sources. To research recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Go to list of questions) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is an acronym for Private Mortgage Insurance. This added plan protects the lender if a borrower is unable to pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal appointment(Go to list of questions) We begin with an inspection of the property. 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 the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
Define "Market Value"(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Go to list of questions) 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 appraisal - 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.
The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state 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 use the appraisal for any purpose.
Which home renovations add the most to the price?(Go to list of questions) 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
As a rule, the most value returned from renovating a home comes in the kitchen. 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, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.