Appraisal Trust Company, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) The method of creating an appraisal consists of an evaluation which leads to an opinion of value. This opinion or estimate is found through a formal process that typically utilizes the three main "common approaches to value". 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 deterioration, plus the land value. The Sales Comparison Approach deals with finding comparable properties in the vicinity and discovering the value based on comparing those homes to the house being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(List of questions) An appraiser generates an impartial and well justified assessment of market value, often in the context of a real estate exchange. Appraisers summarize their findings in appraisal reports.
Why would someone require services from Appraisal Trust Company, LLC?(List of questions) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
How is an appraisal different than a home inspection? (List of questions)The appraiser is not a home inspector and does not do a comprehensive home inspection. An inspection is a third-party evaluation of the livable structure and electrical and mechanical systems of a house, from the top to the foundation. The usual property inspector's report will contain 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 accessible 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?(List of questions) To be blunt, it's like comparing opera to country. What the CMA depends on are vague trends. An appraisal is based on comparable sales that can be validated by public record. Also, the appraisal checks other factors like condition, location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is the person doing 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 properties in and around Knox County creates the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the property's value, unlike the agent, whose income is tied to the value of the home.
What does the appraisal report contain? (List of questions)The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the appraisal is done, how can I have assurance that the final number is valid?(List of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who engages the services of appraisers?(List of questions) Most of the time, appraisers are hired by lenders to estimate the value of property involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Appraisal Trust Company, LLC get the data used to estimate values in Knox County or other areas?(List of questions) Collecting data is one of the main tasks an appraiser engages in. Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is received from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents reveal 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 product.
And last but not least, 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?(List of questions) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Appraisal Trust Company, LLC is the best documentation to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
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. It covers the lender in the event a borrower doesn't pay on the loan and the market price of the home is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser?(List of questions) The first step in most appraisals is the home inspection. 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, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
Define "Market Value"(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?(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 included 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 hires an appraiser directly. In these cases, the appraiser may stipulate the purpose of the appraisal; 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.
How can I get the most ROI out of home improvements?(List of questions) The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
As a rule, the best ROI 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.