Northern Arizona Appraisal, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Top) The method of performing an appraisal report consists of an inspection which forms an opinion of value. The appraiser will typically use a number of "approaches," typically three, to draw up the estimation of market value. One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which involves making a comparison to similar houses close by. Being the most popular approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residential property. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
Describe what an appraiser does(Top) An appraiser produces an objective and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers show their expert findings in appraisal reports.
What would cause me to request services from Northern Arizona Appraisal, Inc.?(Top) There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:
Is an appraisal the same as a comparative market analysis(CMA)?(Top) Simply put, it's apples and oranges. The CMA relies on indistinct local market trends. Appraisals use similar sales which are valid resources. Also, the appraisal verifies other factors like condition, area and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for work they perform, regardless of their outcome.
After completing the appraisal, what assurance is there that the value indicated is valid?(Top) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(Top) Typically, appraisers are called upon by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Maricopa County or other areas?(Top) One of the most important tasks an appraiser must accomplish is to collect property data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is collected from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely need to report when a property lies 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 assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
What can a full appraisal do for me?(Top) An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. When selling your house, 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. 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 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 is an acronym for Private Mortgage Insurance. This added policy protects the lender if a borrower defaults on the loan and the value of the property is lower than what the borrower still owes 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.
Does the appraiser need anything from the homeowner in advance?(Top) We begin with an inspection of the home. During this 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 report. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What is "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 included 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may define the purpose of the appraisal; 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.
I want to get more for my house. Where should I spend money renovating?(Top) The answer to this is different depending upon the location of the home. 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 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.