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Welcome to Watson Real Estate Appraisals, Inc. Frequently Asked Questions (FAQ) page. Here you will find information and typical questions/answers our customers have often asked over the years. We know the appraisal process can be hard to understand at times – which is why we hope this FAQ area will help you to understand a little more what goes into an appraisal and how appraisals work. If there are any questions that we have not answered for you, please do not hesitate to contact us at (843) 399-3030. What does an appraiser do? How Are Appraisers Certified? Who Do Appraisers Typically Work For? What is the Difference Between an Appraisal and a Home Inspection? What is the Difference Between an Appraisal and a Comparative Market Analysis (CMA)? What Does a Residential Real Estate Appraisal Report Contain? Where Does an Appraiser Get the Information Used to Estimate Value? How Do Appraisers Determine The Value of Residential Property? Why Do I Need a Professional Residential Real Estate Appraisal? What Can a Home Appraisal Help Me With? How Can I Help With the Appraisal Process? What is PMI and How Can I Get Rid of It? Who Actually Owns the Appraisal Report? What is ''Market Value?'' After Completing the Appraisal Report, What Assurance is There That the Appraised Value Indicated is Valid? Which Home Renovations Add the Most to the Home’s Value? Back to top What Does an Appraiser Do? Back to top An appraiser provides a professional, unbiased opinion of a property’s market value which is used in making real estate decisions. Appraisers present their formal analysis in the form of an appraisal report. How Are Appraisers Certified? Back to top Most states require that real estate appraisers are state licensed or certified. The state licensed or certified appraiser is trained to render an unbiased opinion based upon extensive education and experience requirements. To become licensed or certified, appraisers must fulfill rigorous education and experience requirements. The specific regulations regarding licensing and certification of real estate appraisers vary from state to state. Once an appraiser is licensed, he or she is required to take continuing education courses in order to keep their license current. Who Do Typically Appraisers Work For? Back to top Appraisers are typically employed and/or contracted by lenders to estimate the value of real estate involved in a loan transaction. Appraisers can also provide services directly to consumers. Appraisers can be helpful in providing opinions of property value in litigation cases, tax matters and investment decisions. What is the Difference Between an Appraisal and a Home Inspection? Back to top A residential real estate appraiser is not a home inspector, nor do they complete home inspections. A home inspection is a third-party evaluation of the accessible structure and mechanical systems of a house – from the roof to the foundation. The standard home inspection report would include an evaluation of the condition of the: heating system, central air conditioning system (temperature permitting), interior plumbing, electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows, doors; and the foundation, basement, and visible structure. What is the Difference Between an Appraisal and a Comparative Market Analysis (CMA)? Back to top A residential real estate appraisal and a CMA are very different. Although CMA’s can be helpful, CMAs rely on vague market trends. The appraisal relies on specific, verifiable comparable sales. In addition, the appraisal looks at other factors like condition, location and construction costs. A CMA delivers a ''ball park figure.'' An appraisal delivers a defensible and carefully documented opinion of value. The biggest difference between a residential real estate appraisal and a CMA is the person creating the CMA report. A CMA is created by a real estate agent who may or may not have a true grasp of the Grand Strand market or of valuation concepts. Appraisals are created by licensed, certified professionals who have made a career out of valuing Grand Strand area properties. Further, the appraiser is an independent voice, with no vested interest in the value of a home; unlike real estate agents whose income is oftentimes tied to the price of the home. What Does a Residential Real Estate Appraisal Report Contain? Back to top Each residential real estate appraisal report must reflect a credible estimate of value and must identify the following items:
Where Does an Appraiser Get the Information Used to Estimate Value? Back to top Gathering data is one of the primary roles of an appraiser. The data gathered can be divided into two categories: specific and general. Specific data is gathered from the home itself, such as: location, condition, amenities, size and other data which is gathered by the appraiser during the inspection. General data is gathered from a number of sources. Grand Strand area Multiple Listing Services (MLS) provide data on recently sold homes in the Grand Strand area that might be used to compare properties. Tax records and other public documents verify actual sales prices in a market. Most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other properties throughout the Grand Strand market. How Do Appraisers Determine The Value of Residential Property? Back to top Appraisers determine the value of residential property through a formal process that typically uses three ''common approaches to value.'' The first approach is the Cost Approach – which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the value of the land. The second approach is the Sales Comparison Approach – which involves making a comparison to other similar, nearby properties which have recently sold. The Sales Comparison Approach is normally the most accurate 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 income produced by the property. Why Do I Need a Professional Residential Real Estate Appraisal? Back to top When the value of your home or other real property is being used to make a significant financial decision, an appraisal will help throughout the buying, selling and transferring of property. If you're selling your home, an appraisal helps you set the most appropriate value. 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 home is often the single, largest financial asset a person will own. Knowing its true value means you can the right financial decisions for your particular situation. What Can a Home Appraisal Help Me With? Back to top Home appraisals help with real estate and mortgage transactions. The types of transactions home appraisals can help with include the following:
How Can I Help With the Appraisal Process? Back to top During the appraisal process, the appraiser 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 appraisal report – this is the first step. So, the best thing you can do to help is make sure the appraiser has easy access to the exterior of the house. Trim any bushes and move any items that would make it difficult to measure the structure. On the inside of your home, make sure that the appraiser can easily access items like furnaces and water heaters. The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What is PMI and How Can I Get Rid of It? Back to top PMI stands for Private Mortgage Insurance. It insures a lender against loss on homes purchased with a down-payment of less than 20%. Once equity in the home reaches 20%, you can eliminate the PMI and start saving immediately. An appraisal can be used to verify the amount of equity the home has earned since its purchase date. Who Actually Owns the Appraisal Report? Back to top In most real estate transactions, the appraisal is ordered by the lender. While the home buyer pays for the report as part of the closing costs, the lender retains the right to use the appraisal report or any information contained within. The home buyer is entitled to a copy of the appraisal report - it's usually included with all of the other closing documents - but is not entitled 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 cases, the appraiser may stipulate how the appraisal can be used: for PMI removal, for estate planning or for tax challenges. If not stipulated otherwise by the appraiser, the home owner can use the appraisal for any purpose. What is ''Market Value?'' Back to top Market value or fair market value is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale; with the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. After Completing the Appraisal Report, What Assurance is There That the Appraised Value Indicated is Valid? Back to top After an appraisal report is complete, an appraiser must ensure the following:
Which Home Renovations Add the Most to the Home’s Value? Back to top The answer to this is different depending upon the location of the home. Different markets value amenities differently. Things like energy-efficient air conditioning units and Carolina living areas such as screened-in patios, can add value in the Grand Strand market. However, as a rule of thumb nationally, 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 were second, returning 85%. |
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