Scroggin Appraisal Services, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) The procedure of writing an appraisal report consists of an inspection which leads to an opinion of value. This opinion or estimate is arrived at using a formal process that typically utilizes three "common approaches to value". One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with finding similar houses nearby and discerning value based on making a comparison of those prior sales to the home being investigated. Being the most commonly used approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a home. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to find the value of a property based on what an investor would pay based on the income produced by the property.
Describe what an appraiser does(Go to list of questions) An appraiser forumlates a fair and credible determination of market value, in the support of real estate transactions. Appraisers reveal the details of their professional findings in appraisal reports.
What would cause me to require a real estate appraisal?(Go to list of questions) There are many reasons to purchase an appraisal from Scroggin Appraisal Services, LLC 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)Appraisers do not do complete residential property inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the home from bottom to top. The archetypal house inspector's report will include an evaluation of the integrity of the property's heating systems, 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)?(Go to list of questions) To be honest, they share nothing in common. The CMA relies on vague market trends. An appraisal relies on comparable sales that can be verified by public record. Area and architectural prices are also precedent in an appraisal. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's behind the report is frankly 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, generate CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their value conclusion.
What's in an appraisal report? (Go to list of questions)The main objective of an appraisal document 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:
Upon completion of the report, how can I have confidence that the value conclusion is legitimate?(Go to list of questions) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who employs appraisers?(Go to list of questions) Mortgage lenders are an appraiser's most likely client, requesting their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Scroggin Appraisal Services, LLC get the information used to estimate values in Hidalgo County or other areas?(Go to list of questions) Compiling data is one of the main things an appraiser engages in. Data can be described as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is collected from a number of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser?(Go to list of questions) If you're involved in some sort of financial decision and the value of your home is relevant, you'll want an appraisal. When selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Scroggin Appraisal Services, LLC is the best documentation to ensure assets are split up fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. This added plan protects the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. 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(Go to list of questions) We start with an inspection of the home. During this process, we 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 the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
What is "Market Value?"(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Go to list of questions) For mortgage transactions, the lender requests 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 appraisal - it's usually bundled 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 situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(Go to list of questions) Like all things real estate, this is dependent on a home's location. 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. 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 boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.