Sornberger, Vinson & Associates has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) An appraisal is a thought process leading to an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, minus age and physical deterioration, plus the land value. The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which concerns concluding a comparison to similar homes nearby. The Sales Comparison Approach is normally the most definitive and best indicator of value for a house. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to determine the value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser provides a fair and credible assessment of market value, in the support of real estate exchanges. Appraisers present their expert analysis in appraisal reports.
Why would a person require services from Sornberger, Vinson & Associates?(Go to list of questions) There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
How is an appraiser different than a home inspector? (Go to list of questions)Home inspectors do not estimate an opinion of value and do not do appraisal reports. The point of a home inspection is to investigate the structure of the property from basement to attic. Commonly, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)?(Go to list of questions) To be honest, they have nothing in common. The CMA depends on vague market trends. Appraisals use similar sales which are verifiable resources. The appraisal report will also include location and construction values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
Who's creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their value conclusion.
What's in an appraisal report? (Go to list of questions)The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the report, how can I have certainty that the value indicated 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 engages the services of appraisers?(Go to list of questions) Typically, appraisers are employed by lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does Sornberger, Vinson & Associates get the information used to estimate values in King County or other areas?(Go to list of questions) Compiling information is one of the primary functions of an appraiser. Data can be divided into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is collected from a number of sources. To find out about recent sales to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(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. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI is an acronym for Private Mortgage Insurance. PMI takes care of the lender in case a borrower doesn't pay on the loan and the value of the house 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.
Should I do anything in advance of the appraisal appointment(Go to list of questions) We begin with an inspection of the property. 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 status of its amenities. On the home's interior, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.
To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
What does "Market Value" mean?(Go to 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?(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 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.
It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
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 best ROI from renovating a home comes in the kitchen. 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 were second, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.