Columbus Appraisal Company, LLC has answers to "Frequently Asked Questions"
Columbus Appraisal Company llc., is always willing to handle any concerns you might have about appraisals or real estate in Central Ohio.
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Define the term "Appraisal"
Describe what an appraiser does
What would cause me to request a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the appraisal is done, how can I have assurance that the final number is accurate?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Delaware County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?
Define the term "Appraisal" (Back to top)The appraisal process is an evaluation that produces an opinion of value. The real estate appraiser must use a several "approaches," typically three, to come to the estimation of market value. One of the processes 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. Another of the approaches is the Sales Comparison Approach - which concerns making a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a property. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
Describe what an appraiser does (Back to top)An appraiser generates a fair and credible determination of market value, often in the context of a real estate exchange. Appraisers show their findings in appraisal reports.
What would cause me to request a real estate appraisal? (Back to top)There are many 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:
Click here for a more detailed explanation of the process dealing with getting an appraisal.
- If you are applying for a loan.
- To lower your tax burden.
- To demonstrate a homeowner's acquired equity and remove insurance.
- To fight improperly assessed property taxes.
- To settle an estate.
- To provide you a leg-up when purchasing real estate.
- To determine a likely price when listing your home.
- To ensure parties are provided just compensation in eminient domain cases.
- Because a government agency such as the IRS requires it.
- If you are ever involved in a civil case.
The appraiser is not a home inspector and he or she does not do a full home inspection. A third-party home inspector will inspect the structure of the home, from the top to the bottom. The usual house inspector's report will include an evaluation of the condition of the property'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.
What is the difference between an appraisal and a comparative market analysis (CMA)? (Back to top)Frankly, they have nothing in common. What the CMA relies upon are superficial trends. An appraisal utilizes comparable sales that can be validated by records. Also, the appraisal verifies other factors like condition, neighborhood and replacement prices. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is who's behind the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Ohio licensed professional who made a career on valuing properties in and around Delaware County creates the appraisal. Moreover, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
The main objective of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report
- The client and whose purposes the appraisal is to serve.
- How the appraisal is supposed to be used.
- The purpose of the assignment.
- The type of value contained and a definition of the value reported.
- The effective date of the appraisal.
- Pertinent property characteristics, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible factors.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- What was entailed in the process of completing the appraisal.
Once the appraisal is done, how can I have assurance that the final number is accurate? (Back to top)In communicating an appraisal report, each appraiser must ensure the following:
To become a state licensed appraiser, we must fulfill intense education and experience requirements that train us to produce an unbiased opinion. Likewise, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis utilized in the appraisal was appropriate.
- Whether individually or collectively, there were no critical errors contained in the report, nor any material details left out.
- That appraisal services were not carried out in a careless or negligent fashion.
- That a trustworthy, supportable appraisal report was communicated.
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Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and practical experience. Once licensed, he/she must then complete continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.
Who employs appraisers? (Back to top)Mortgage lenders are an appraiser's typical customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in Delaware County or other areas? (Back to top)Compiling information is one of the primary things an appraiser does. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is collected from a number of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
What can a full appraisal do for me? (Back to top)An appraisal is a worthwhile anytime the value of your home is pertinent to a financial decision. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Columbus Appraisal Company, LLC is the best way to ensure assets are divided properly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it? (Back to top)PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender in the event a borrower defaults on the loan and the value of the property is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
The savings from getting rid of your PMI pays for the appraisal in a matter of months. Nobody is more qualified than Columbus Appraisal Company, llc when it comes to analyzing real estate appreciation in central Ohio.
Contact us today.
Does the appraiser need anything from the homeowner in advance? (Back to top)We start 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. Inside, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
- A survey or plot map of the property and building (if readily available).
- Information on any written private agreements, such as a shared driveway with a neighbor.
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
- A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
What does "Market Value" mean? (Back to top)In real estate appraising, Market Value is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Once complete, who actually owns the appraisal report? (Back to top)For mortgage transactions, the lender orders the appraisal, either directly or through a third party. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is certainly 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.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others? (Back to top)It really depends on the market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
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 were second, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.