Augustine, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The appraisal process is an evaluation that generates an opinion of value. This opinion or estimate is figured through the use of a formal method that generally utilizes three "common approaches to value". One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, minus depreciation and physical dilapidation, plus the land value. Another of the methods is the Sales Comparison Approach - which involves making a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a house. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.
What does an appraiser do?(Go to list of questions) An appraiser produces an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers document their findings in appraisal reports.
What are the reasons a person would require your services?(Go to list of questions) There are many reasons to purchase an appraisal from Augustine, Inc. with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
How is an appraiser different than a home inspector? (Go to list of questions)Appraisers do not do perform house inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and mechanical systems of a house, from the roof to the foundation. Commonly, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed 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) To be blunt, it's like comparing broadband and dial-up. The CMA depends on indefinite market trends. An appraisal relies on comparable sales that can be proven by public record. Location and construction values 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 who's behind the report. 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. Moreover, the appraiser is an independent voice, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (Go to list of questions)The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
Once the assignment has been completed, what assurance is there that the value indicated is legitimate?(Go to list of questions) In communicating an appraisal report, each appraiser must ensure the following:
Who employs appraisers?(Go to list of questions) Most of the time, appraisers are called upon by lenders to render a value opinion on property involved in a loan transaction - to make sure the property is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Augustine, Inc. get the data used to estimate values in Hamilton County or other areas?(Go to list of questions) Compiling data is one of the primary occupations of an appraiser. Data can be split into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.
General data is received from a number of sources. To find out about recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers often need to report when a property lies in a flood zone, so 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 past experience in creating appraisals for other houses in the same market.
Why do I need a professional appraisal?(Go to list of questions) An appraisal is a worthwhile whenever your home's value is relevant to a financial decision. If you're selling your home, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Augustine, Inc. is the best documentation to ensure assets are divided evenly. A house 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. PMI protects the lender in the event a borrower is unable to pay on the loan and the value of the property is lower than what the borrower still owes on 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.
Do you need anything from me in advance?(Go to list of questions) We begin with an inspection of the property. 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. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
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 is commonly defined as:
Who actually owns the appraisal report?(Go to list of questions) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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 entitled to a copy of the appraisal - 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.
This rule doesn't apply when a home owner hires an appraiser directly. In these scenarios, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Go to list of questions) Like all things real estate, this is dependent on a home's location. For example, installing 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 weren't far behind, 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.