David R. Clark Real Estate Services has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Return to top)The appraisal process is an estimation that leads to an opinion of value. This opinion or estimate is arrived at through a formal process that usually utilizes the three main "common approaches to value". The Cost Approach is one of the processes that appraisers use to find the value of a house; it involves finding what the improvements would cost minus physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which involves discovering a comparison to other similar properties within a close proximity which have recently sold. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a 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 would bring in.
Describe what an appraiser does(Return to top)An appraiser produces an impartial and well justified assessment of market value, to be used in making real estate transactions. Appraisers show their investigation in appraisal reports.
What would cause me to need services from David R. Clark Real Estate Services?(Return to top)There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
How is an appraiser different than a home inspector? (Return to top)Home inspectors do not provide an opinion of value and are not appraisers. An inspection is a third-party evaluation of the livable structure and mechanical systems of a property, from the top to the foundation. For the most part, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Return to top)Simply, they share nothing in common. What the CMA relies upon are ill-defined trends. The appraisal is reliant on similar verifiable comparable sales. In addition, the appraisal looks at other factors like condition, neighborhood and replacement prices. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person behind the report is actually the biggest difference between a CMA and an appraisal. 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. A certified, state licensed professional who made their livelihood on valuing real estate in and around Kern County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.
What's in an appraisal report? (Return to top)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:
After completing the appraisal, what guarantee is there that the value indicated is veritable?(Return to top)In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who hires David R. Clark Real Estate Services(Return to top)Commonly, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does David R. Clark Real Estate Services get the data used to estimate values in Kern County or other areas?(Return to top)Gathering information is one of the main things an appraiser performs. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is gathered from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers often have to report when a property lies 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 gathers general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
Why do I need a professional appraisal?(Return to top)If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from David R. Clark Real Estate Services is the best way to ensure assets are split up properly. 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 short for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower defaults on the loan and the value of the house is less than what the borrower still owes on the loan. 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 property 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 we have easy access to the exterior of the house . Trim any landscaping and relocate any items that would get in our way while we measure the structure. Indoors, 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 does "Market Value" mean?(Return to top)In real estate appraising, Market Value is commonly defined as:
Who has rights to 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 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 engages an appraiser directly. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(Return to top)The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
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 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.