E. T. Jones & Associates, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(List of questions) An appraisal report is a thought process leading to an opinion of value. This opinion or estimate is figured by a formal process that usually uses the three main "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the house, less the depreciation and physical dilapidation, adding the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which involves concluding a comparison to comparable properties nearby. Being the most common approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.
What does an appraiser do?(List of questions) An appraiser forumlates an objective and well supported assessment of market value, to be used in making real estate transactions. Appraisers document their investigation in appraisal reports.
What would cause me to request your services?(List of questions) There are a lot of reasons to order an appraisal from E. T. Jones & Associates, Inc. with the usual reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)The appraiser is not a home inspector and does not do a comprehensive home inspection. An inspection is a third-party evaluation of the accessible structure and systems of a home, from the top to the bottom. The standard home inspector's report will include an evaluation of the condition of the home'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.
Is an appraisal the same as a comparative market analysis(CMA)?(List of questions) To be blunt, it's like comparing broadband and dial-up. The CMA utilizes market trends to create most of their business. An appraisal utilizes comparable sales that can be validated by public record. Area and construction costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the biggest difference is who's doing the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Texas licensed professional who bases a career on valuing real estate in and around Dallas County creates the appraisal. 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 previously agreed upon sum for work they perform, regardless of their outcome.
What does the appraisal report contain? (List of questions)The main point 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:
After completing the report, what guarantee is there that the value indicated is valid?(List of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who do appraisers work for?(List of questions) Typically, appraisers are employed by lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Dallas County or other areas?(List of questions) Compiling information is one of the primary functions of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is received from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is available 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.
What can a full appraisal do for me?(List of questions) An appraisal is a valuable tool anytime the value of your home is relevant to some financial decision. If you're selling your house, an appraisal assists you in setting the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from E. T. Jones & Associates, Inc. is the best way to ensure assets are split up fairly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI is an acronym for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the value of the property is lower than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from the homeowner in advance?(List of questions) The first step in most appraisals is the home inspection. 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 features. The best thing you can do to help is make sure the appraiser has 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 the appraiser can easily access appliances like furnaces and water heaters.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
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:
Who actually owns the appraisal report?(List of questions) For mortgage transactions, the lender orders 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 certainly entitled to a copy of the report - 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 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 use the appraisal for any purpose.
Which home renovations add the most to the price?(List of questions) It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 atypical for your neighborhood in terms of size.