Harmon Management Group has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(List of questions) An appraisal report is an estimation allowing the appraiser to come to an opinion of value. The appraiser will typically use a several "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the methods that appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach deals with finding similar homes in the vicinity and figuring out the value based on making a comparison of those homes to the property being investigated. Being the most common approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(List of questions) An appraiser generates a professional, unbiased assessment of market value, often in the context of a real estate exchange. Appraisers present their expert findings in appraisal reports.
What are the reasons I would need a real estate appraisal?(List of questions) There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will investigate the structure of the house, from the top to the bottom. The general home inspector's report will contain 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 visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
My agent performed a CMA for me. Is that the same as an appraisal?(List of questions) Frankly, they share nothing in common. What the CMA depends on are ill-defined trends. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also include neighborhood and construction costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is actually the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What can I expect to see in my appraisal report? (List of questions)Each appraisal must demonstrate a supported estimate of value and must document the following:
Once the report has been completed, what assurance is there that the final number is legitimate?(List of questions) In the documentation of an appraisal, each appraiser must make sure of the following:
Who employs appraisers?(List of questions) Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does Harmon Management Group get the data used to estimate values in New Castle County or other areas?(List of questions) Gathering data is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.
General data is gathered from a number of sources. To look up recently sold homes to be used as "comps", an appraiser will typically use 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 service.
And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
What can a full appraisal do for me?(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 determine a 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. When buying, be sure you're not overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Harmon Management Group is the best documentation to ensure assets are divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(List of questions) PMI is short for for Private Mortgage Insurance. It protects the lender in the event a borrower defaults on the loan and the market price of the home is less than what is owed on the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Should I do anything in advance of the appraisal inspection(List of questions) The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure we can get to items like furnaces and water heaters.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
How does an appraiser define "Market Value"?(List of questions) In real estate appraising, Market Value is commonly defined as:
Who has rights to the appraisal report?(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 report - 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 situations, 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 use the appraisal for any purpose.
I want to get more for my house. Where should I spend money renovating?(List of questions) The added value of a particular amenity truly depends on the local market. 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 investment. 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, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.