FAQS
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What is an appraisal?
An appraisal is a thought process leading to an opinion of value. This opinion is made through a formal process that typically uses three common approaches to value. These common approaches are the Cost
Approach, the Sales Comparison Approach and the Income Approach. The Cost Approach is what it would cost to replace the improvements plus the land value. The Sales Comparison Approach involves making a
comparison to similar properties, which sold in the nearby area. This is normally the most accurate indicator of value for a residential property. The Income Approach involves estimating what an investor
would pay based on the income produced by the property.
What does an appraiser do?
An appraiser provides a professional, unbiased opinion of market value. This information is presented in a report that will be used in making real estate decisions.
What is the difference between an appraisal and a home inspection?
The appraisal is an opinion of market value and a home inspection is a third-party evaluation of the accessible structure and mechanical system of a house. The standard home inspector's report will
include an evaluation of everything from the roof to that foundation.
Who owns the appraisal report?
In most real estate transactions the lender owns the appraisal. While the homebuyer pays for the report, the lender retains the right to use it or any other information contained within. The homebuyer is
entitled to a copy of the report, but is not entitled to use the report for any other purpose without permission from the lender. The only exception to the rule is when a homeowner orders an appraisal
directly.
What is the difference between an appraisal and a comparative market analysis?
The CMA relies in vague market trends and delivers a "ball park figure". An appraisal relies on specific comparable sales and delivers a defensible and carefully documented opinion of value. The biggest
difference is the person who creates the report. A real estate agent creates a CMA and a licensed professional appraiser creates an appraisal.
Why do I need a professional appraisal?
Anytime the value of your home or property is being used to make a significant financial decision an appraisal must be used. When buying or selling a home an appraisal makes sure you don't overpay and
helps set the most appropriate value. A home is often the largest financial asset anyone owns and knowing its true value means you can make the right financial decisions.
Why would a person need a home appraisal?
There are many reasons to obtain an appraisal. The most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal may include, obtaining a loan, to lower tax
burden, to establish the replacement cost of insurance, to settle an estate, to provide a negotiation tool when buying or selling real estate, to protect your rights in a condemnation case or lawsuit and
because a government agency may require you too.
Where does an appraiser get the information used to estimate value?
Gathering data is one of the primary roles of appraiser. This data can be divided into specific and general. Specific data is gathered from the home itself. General data is gathered from a number of
sources such as Local Multiple Listing Services (MLS), tax records and other public documents, flood zone data and most importantly, from the appraisers past experience in creating appraisals for other
properties in the same market.
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