R2 Appraisal, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Go to list of questions) An appraiser performs an evaluation that generates an opinion of value. The appraiser must use a several "approaches," typically three, to draw up the estimation of market value. The Cost Approach is one of the processes that real estate appraisers use to find the value of a property; it involves discerning what the improvements would cost minus physical depreciation, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable houses nearby. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(Go to list of questions) An appraiser produces a fair and credible opinion of market value, in the support of real property transactions. Appraisers summarize their professional conclusions in appraisal reports.
Why would someone require your services?(Go to list of questions) There are many reasons to get an appraisal from R2 Appraisal, Inc. with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
How is an appraisal different than a home inspection? (Go to list of questions)The appraiser is not a home inspector and does not do a full home inspection. The purpose of a home inspection is to evaluate the structure of the property from bottom to top. Usually, a home inspection report will evaluate the amenities and the requirements of the house: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Frankly, it's apples and oranges. The CMA utilizes market trends to generate most of their business. An appraisal is based on comparable sales that can be verified by public record. Also, the appraisal verifies other factors like condition, area and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is the person creating the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who made a career on valuing properties in and around King County is behind the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.
What does the appraisal report contain? (Go to list of questions)Each appraisal should demonstrate a credible value opinion and will document the following:
Once the report has been delivered, how can I have certainty that the value indicated is accurate?(Go to list of questions) In communicating an appraisal report, each appraiser must make sure of the following:
Who engages the services of appraisers?(Go to list of questions) Commonly, appraisers are hired by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does R2 Appraisal, Inc. get the information used to estimate values in King County or other areas?(Go to list of questions) One of the main tasks an appraiser performs is to compile property data. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.
Why do I need a professional appraisal?(Go to list of questions) If you're involved in any kind of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. 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. Simply put, 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?(Go to list of questions) PMI is short for for Private Mortgage Insurance. This supplementary policy covers the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than the loan balance. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
How do I get ready for the appraiser?(Go to list of questions) We begin with an inspection of the home. 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. 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 the appraiser can get to items like furnaces and water heaters.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
How does an appraiser define "Market Value"?(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Once complete, who actually owns the appraisal report?(Go to list of questions) In most real estate transactions, the appraisal is ordered by the lender. 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 appraisal - it's usually included with all the other closing documents - but is not entitled 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 cases, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.
Are some home improvements more worthwhile than others?(Go to list of questions) The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 were second, yielding 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.