Dean & Associates has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Return to top)An appraisal is an inspection leading to an opinion of value. This opinion or estimate is found through the use of a formal method that generally uses three "common approaches to value". One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for similar homes nearby and discerning value based on comparing those homes to the property being investigated. The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residential property. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the income produced by the property.
Describe what an appraiser does(Return to top)An appraiser produces an objective and well supported assessment of market value, often in the context of a real estate exchange. Appraisers reveal the details of their investigation in appraisal reports.
What would cause me to need your services?(Return to top)There are a lot of reasons to order an appraisal from Dean & Associates with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
Is an appraisal the same as a home inspection? (Return to top)Home inspectors do not estimate an opinion of value and do not use the same forms as appraisers. A third-party home inspector will judge the structure of the house, from the top to the foundation. The general property inspector's report will contain an evaluation of the condition of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible 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)?(Return to top)To be blunt, it's like comparing broadband and dial-up. What the CMA depends on are ill-defined trends. Appraisals use comparable sales which are verifiable resources. Also, the appraisal verifies other factors like condition, area and replacement costs. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is who's creating 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. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (Return to top)Each appraisal must demonstrate a credible estimate of value and will clearly state the following:
Once the appraisal has been delivered, what assurance is there that the final number is trustworthy?(Return to top)In communicating an appraisal report, each appraiser must ensure the following:
Who hires Dean & Associates(Return to top)Mortgage lenders are an appraiser's typical client, requesting their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Camden County or other areas?(Return to top)Gathering data is one of the primary roles of an appraiser. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a variety of places. To look up recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers often have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
How can a licensed appraiser help me?(Return to top)Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal helps you set the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Dean & Associates is the best documentation to ensure assets are split up evenly. Simply put, a home 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?(Return to top)PMI is an acronym for Private Mortgage Insurance. This additional plan covers the lender if a borrower is unable to pay on the loan and the value of the house is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal inspection(Return to top)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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
Define "Market Value"(Return to top)In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Return to top)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 engages an appraiser directly. In these situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements?(Return to top)Like all things real estate, this is dependent on a home's location. 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 move. 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, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.