Bales Appraisals has answers to "Frequently Asked Questions"
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Bales Appraisals is eager to answer any concerns you might have about appraisals in Tulsa and Tulsa County.
Contact us today to see how we can help solve your valuation problems.
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What is an appraisal?
What does an appraiser do?
What are the reasons I would require your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Upon completion of the report, how can I have confidence that the final number is trustworthy?
How hard is it to become certified?
Who engages the services of appraisers?
Where does Bales Appraisals get the data used to estimate values in Tulsa County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?
What is an appraisal? (Go to list of questions)
The procedure of creating an appraisal report consists of an inspection which forms an opinion of value.
This opinion or estimate is found by using a formal method that commonly utilizes the three main "common approaches to value".
The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves discerning what the improvements would cost without physical deterioration, adding the land value.
Another of the processes is the Sales Comparison Approach - which involves making a comparable analysis to other similar properties within a close proximity which have recently sold.
The Sales Comparison Approach is normally the most accurate and clearest indicator of value for a residential property.
The Income Approach is mainly used for finding 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 offers a professional, unbiased opinion of market value, to be used in making real estate transactions.
Appraisers present their professional investigation in appraisal reports.
What are the reasons I would require your services? (Go to list of questions)
There are a lot of reasons to purchase an appraisal from Bales Appraisals with the usual reason being real estate and mortgage transactions.
A few other reasons for obtaining an appraisal report include:
- If you are applying for a loan.
- If you would like to reduce your property tax burden.
- To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
- To fight improperly assessed property taxes.
- To handle an estate.
- To offer you an edge when purchasing a home.
- To figure out a likely price when putting your home on the market.
- To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
- Because an official agency such as the IRS requires it.
- If you are ever involved in a lawsuit.
Click here for a more detailed explanation of the process involved in getting an appraisal.
Appraisers do not do provide residential property inspections and are not home inspectors.
A third-party home inspector will evaluate the structure of the property, from the roof to the bottom.
Usually, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity 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)? (Go to list of questions)
Simply, they share nothing in common.
The CMA relies on indistinct market trends.
The appraisal is based on similar proven comparable sales.
Location and construction prices are also important in an appraisal.
All a CMA does is generate a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the largest differentiator is the person doing 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 produce by a licensed, certified professional who has made a career out of valuing properties.
Moreover, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.
Each appraisal must indicate a believable estimate of value and must clearly state the following:
- Who engaged the appraiser and other intended users.
- How the appraisal is supposed to be used.
- The purpose of the appraisal.
- The type of value contained and a definition of the value reported.
- The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
- Relevant property characteristics, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
- Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work used to complete the appraisal.
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report
Upon completion of the report, how can I have confidence that the final number is trustworthy? (Go to list of questions)
In communicating an appraisal report, each appraiser must ensure the following:
- The appraisal contained analysis of the data.
- Whether individually or collectively, there were no critical errors contained in the report, nor any material details left out.
- That appraisal services were not executed in a careless or negligent fashion.
- The final appraisal report was understandable, credible and defensible.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that enable us to produce an unbiased opinion.
In addition, appraisers must obey a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Go to list of questions)
Licensing and certification takes classroom study, tests and real world experience.
Once an appraiser is licensed, he/she must then engage in continuing education courses so the license remains up to date. To see the specific requirements for any state click here.
Who engages the services of appraisers? (Go to list of questions)
Mortgage lenders are an appraiser's typical customer, using their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan.
Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Bales Appraisals get the data used to estimate values in Tulsa County or other areas? (Go to list of questions)
Gathering information is one of the primary occupations of an appraiser.
Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is collected from a number of sources.
To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service.
To double-check actual sales prices, we research items in the assessor's office and other public documents.
Appraisers routinely have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
What can a full appraisal do for me? (Go to list of questions)
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, be sure you're not overpaying by commissioning an independent appraisal.
If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly.
Simply put, a house 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? (Go to list of questions)
PMI is the common abbreviation for for Private Mortgage Insurance.
It covers the lender in case a borrower is unable to pay on the loan and the value of the property is less than what is owed on the loan.
Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
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The amount you keep from cancelling your PMI pays for the appraisal in no time. Nobody is more qualified than Bales Appraisals when it comes to analyzing real estate appreciation in Tulsa and Tulsa County. Contact us today.
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How do I get ready for the appraiser? (Go to list of questions)
The first step in most appraisals is the property inspection.
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.
Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
- Information on any written private agreements, such as a shared driveway with a neighbor.
- Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
- Information on "Homeowners Associations" or condominium covenants and fees.
- Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
- Most recent real estate tax bill from Tulsa and or legal description of the property.
Define "Market Value" (Go to list of questions)
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Does the appraisal belong to the bank or the consumer? (Go to list of questions)
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 entitled to use the report for any other purpose without permission from the lender.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage.
In these cases, the appraiser may stipulate how the appraisal can be used; 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.
Which home renovations add the most to the price? (Go to list of questions)
It really depends on the market.
For example,
adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
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 were second, yielding 85%.
Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.
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