Soileau Appraisal Group has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The method of creating an appraisal report deals with an investigation which leads to an opinion of value. This opinion or estimate is discerned by a formal method that typically uses three "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves discerning what the improvements would cost minus physical depreciation, plus the land value. The Sales Comparison Approach involves finding similar houses nearby and figuring out the value based on making a comparison of those homes to the property being investigated. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Back to top) An appraiser generates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers document their expert investigation in appraisal reports.
Why would a person request services from Soileau Appraisal Group?(Back to top) There are a lot of reasons to get an appraisal from Soileau Appraisal Group with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:
How is an appraisal different than a home inspection? (Back to top)The appraiser is not a home inspector and he or she does not do a complete home inspection. An inspection is a third-party investigation of the livable structure and mechanical systems of a home, from the top to the foundation. The standard 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?(Back to top) Frankly, they share nothing in common. The CMA utilizes market trends to generate most of their business. The appraisal relies on specific valid comparable sales. The appraisal report will also include neighborhood and building values. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the most significant factor is the person doing the report. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who bases their livelihood on valuing real estate in and around Osceola County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon sum for work they perform, regardless of their value conclusion.
What does the appraisal report contain? (Back to top)The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
Upon completion of the appraisal, what assurance is there that the value indicated is accurate?(Back to top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(Back to top) Mortgage lenders are an appraiser's typical client, needing their services to ensure property 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 information used to estimate values in Osceola County or other areas?(Back to top) One of the main things an appraiser does is to compile data. 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 gathered by the appraiser during an inspection.
General data is received from a many sources. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(Back 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 house, an appraisal will help you determine 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. Knowing its true value means you can make informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is an acronym for Private Mortgage Insurance. It takes care of the lender in the event a borrower doesn't pay on the loan and the value of the property is less 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 the homeowner in advance?(Back to top) We start with an inspection of the property. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its amenities. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would get in our way while we measure the structure. On the inside, make sure we can get to appliances 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:
What is "Market Value?"(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to 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 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define 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.
Are some home improvements more worthwhile than others?(Back to top) A home's location - what city it is in and even what part of that city - is key to this popular question. 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%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.