What is an appraisal?
An appraisal is a professional, unbiased opinion of market value, to be used in making real estate decisions. This opinion or estimate is arrived at through a formal process that can include what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value; making a comparison to other similar, nearby properties which have recently sold; and estimating what an investor would pay based on the income produced by the property.
Why would a person need a home appraisal?
There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include to lower your tax burden, establish the replacement cost of insurance, contest high property taxes, and to settle an estate.
What is the difference between an appraisal and home inspection?
The appraiser is not a home inspector nor does he/she do a complete home inspection. An appraiser gives an opinion of market value, while a home inspection is a third-party evaluation of the accessible structure and mechanical systems of a house, from the roof to the foundation.
What is the difference between an appraisal and a Comparative Market Analysis (CMA)?
The CMA is created by a real estate agent and relies on vague market trends, delivering a “ball park figure.” An appraisal relies on specific, verifiable comparable sales and other factors like condition, location and construction costs, delivering a carefully documented opinion of value. The appraisal is created by a Certified professional who has made a career out of valuing properties. Further, 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.
Are appraisers certified?
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. 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. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
How do I get ready for the appraisal?
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. 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, make sure that the appraiser can easily access items like furnaces and water heaters.
Who actually owns the appraisal report?
In most real estate transactions, the appraisal is ordered by the lender. The home buyer is entitled to a copy of the 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 (Private Mortgage Insurance) removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.