JM Real Estate Group, LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) The method of producing an appraisal deals with an investigation which forms an opinion of value. The real estate appraiser will typically use a several "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the age and physical deterioration, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable properties close by. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a property. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.
What does an appraiser do?(List of questions) An appraiser generates a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers summarize their analysis in appraisal reports.
What are the reasons I would request a real estate appraisal?(List of questions) There are a lot of reasons to purchase an appraisal from JM Real Estate Group, LLC with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will judge the structure of the home, from the roof to the foundation. The archetypal house inspector's report will contain an evaluation of the integrity of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
What is the difference between an appraisal and a comparative market analysis (CMA)?(List of questions) Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on indefinite market trends. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also include neighborhood and construction values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the agent, whose income is tied to the value of the home.
What can I expect to see in my appraisal report? (List of questions)Each appraisal must indicate a believable value opinion and should document the following:
Upon completion of the appraisal, what assurance is there that the final number is valid?(List of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who do appraisers work for?(List of questions) Mortgage lenders are an appraiser's typical customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does JM Real Estate Group, LLC get the data used to estimate values in Orange County or other areas?(List of questions) Collecting data is one of the main things an appraiser does. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often need to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, the appraiser assimilates 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?(List of questions) An appraisal is a valuable tool anytime the value of your home is pertinent to some financial decision. If you're selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(List of questions) PMI is an acronym for Private Mortgage Insurance. This added plan covers the lender if a borrower is unable to pay on the loan and the market price of the home is lower 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.
Should I do anything in advance of the appraisal inspection(List of questions) We start with an inspection of the property. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.
To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"?(List of questions) 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?(List of questions) In most real estate transactions, the appraisal is ordered by the lender. 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 certainly 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may stipulate 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.
How can I get the most ROI out of home improvements?(List of questions) It really depends on the 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. 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 as long as your home doesn't then become overbuilt for your neighborhood in terms of size.