David Lawhon Appraisal, Inc. has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(See list of FAQ's) An appraisal report is a thought process leading to an opinion of value. This opinion or estimate is arrived at through a formal process that generally 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 restore the improvements to the home, less the age and physical dilapidation, adding the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which involves concluding a comparison to comparable homes nearby. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a residential property. The Income Approach is primarily 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(See list of FAQ's) An appraiser generates a fair and credible determination of market value, often in the context of a real estate exchange. Appraisers reveal the details of their conclusions in appraisal reports.
What would cause me to need services from David Lawhon Appraisal, Inc.?(See list of FAQ's) 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 purchasing an report include:
How is an appraiser different than a home inspector? (See list of FAQ's)The appraiser is not a home inspector and does not do a full home inspection. An inspection is a third-party evaluation of the livable structure and appliances of a home, from the roof to the foundation. The stereotypical property inspector's report will contain an evaluation of the integrity 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.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Honestly, they share nothing in common. The CMA relies on indistinct market trends. The appraisal is based on specific definite comparable sales. The appraisal report will also include neighborhood and construction prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
The person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, North Carolina licensed professional who bases a career on valuing homes in and around Wake County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their outcome.
What's in an appraisal report? (See list of FAQ's)Every appraisal must demonstrate a believable value opinion and should identify the following:
Once the report is done, what assurance is there that the value indicated is trustworthy?(See list of FAQ's) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(See list of FAQ's) Typically, appraisers are hired by mortgage lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does David Lawhon Appraisal, Inc. get the information used to estimate values in Wake County or other areas?(See list of FAQ's) Compiling data is one of the primary activities of an appraiser. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is collected from a numerous places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
How can a licensed appraiser help me?(See list of FAQ's) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal helps you set the most appropriate price. 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. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. PMI protects the lender in case a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from me in advance?(See list of FAQ's) 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 find our way to 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.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) For mortgage transactions, the lender requests 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 entitled to a copy of the report - it's usually bundled 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 hires an appraiser directly. In these scenarios, the appraiser may state the purpose of the appraisal; 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?(See list of FAQ's) This really depends on where the home is. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
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%. On the contrary, something that may not add value would be painting just for the sake of redecorating.