High Country Appraisals, Inc. has answers to "Frequently Asked Questions"
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High Country Appraisals, Inc. is willing to talk to you about any questions you might have about appraisals in Watauga County.
Contact High Country Appraisals, Inc. today to learn how we can help solve your valuation problems.
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Define the term "Appraisal"
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the appraisal, how can I have assurance that the final number is legitimate?
What goes into an appraiser's certification?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Watauga County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?
Define the term "Appraisal" (Top)
The method of creating an appraisal consists of an inspection which leads to an opinion of value.
This opinion or estimate is arrived at by a formal method that typically utilizes the three main "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 home, less the depreciation and physical deterioration, plus the land value.
The Sales Comparison Approach involves finding similar properties in the vicinity and figuring out the value based on making a comparison of those properties to the property being appraised.
Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property.
One of the least common approaches in appraising homes is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the capital produced by the building.
What does an appraiser do? (Top)
An appraiser forumlates an objective and well supported determination of market value, to be used in making real estate transactions.
Appraisers demonstrate their professional analysis in appraisal reports.
What would cause me to need a real estate appraisal? (Top)
There are many reasons to get an appraisal from High Country Appraisals, Inc. with the usual reason being real estate and mortgage transactions.
Other reasons for purchasing an appraisal report include:
- If you are applying for a loan.
- If you would like to reduce your property tax obligations.
- To show a homeowner has 30% equity and remove insurance.
- To challenge improperly assessed property taxes.
- To settle an estate.
- To offer you a leg-up when purchasing real estate.
- To figure out a likely price when putting your home on the market.
- To ensure parties are provided just compensation in eminient domain cases.
- Government agencies such as the IRS require an appraisal on every property.
- If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process about getting an appraisal.
Appraisers do not do provide house inspections and are not home inspectors.
The purpose of a home inspection is to evaluate the structure of the house from foundation to top.
The usual 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 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)? (Top)
Honestly, they have nothing in common.
What the CMA relies upon are superficial trends.
The appraisal is reliant on similar proven comparable sales.
The appraisal report will also include neighborhood and construction prices.
The CMA will provide a non-specific figure.
An appraisal delivers a defensible and carefully documented opinion of value.
The person creating the report is hands down the most significant difference between a CMA and an appraisal.
A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts.
A certified, North Carolina licensed professional who made their livelihood on valuing real estate in and around Watauga County creates the appraisal.
Further, the appraiser is an independent party, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.
The main objective of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
- The client and whose purposes the appraisal is to serve.
- The intended use of the report.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the value opinion.
- Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work used when completing the appraisal.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report
After completing the appraisal, how can I have assurance that the final number is legitimate? (Top)
In the documentation of an appraisal, each appraiser must make sure of the following:
- That the information analysis utilized in the appraisal was proper.
- Whether individually or collectively, there were no critical errors contained in the report, nor any relevant details left out.
- That appraisal services were not carried out in a careless or negligent manner.
- That a solid, substantiated appraisal report was communicated.
There are intense classroom and real world experience requirements that must be adhered to in order to become a licensed appraiser in North Carolina.
Likewise, appraisers must obey a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Top)
Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and experience working under a supervisory appraiser.
Once an appraiser is licensed, he/she is required to engage in continuing education courses so the license stays up to date. To see the specific requirements for any state click here.
Who hires an appraiser? (Top)
Mortgage lenders are an appraiser's typical client, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default.
Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Watauga County or other areas? (Top)
Compiling data is one of the primary roles of an appraiser.
Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a number of places.
To research recently sold homes 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 product.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
How can a licensed appraiser help me? (Top)
If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal.
If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market.
When buying, you can avoid overpaying by commissioning an independent appraisal.
For those settling an estate or divorce, an appraisal from High Country Appraisals, Inc. is the best way to ensure assets are split up fairly.
A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it? (Top)
PMI is an acronym for Private Mortgage Insurance.
This supplementary plan takes care of the lender if a borrower doesn't pay on the loan and the market price of the house is less than the loan balance.
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.
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The money you keep from getting rid of the PMI required when you got your mortgage pays for the appraisal in no time. High Country Appraisals, Inc. has years of experience with real estate value trends in Boone and Watauga County. Contact us today.
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How do I get ready for the appraiser? (Top)
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 condition of its features.
Inside, pick up any clutter and make sure we can find our way 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.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
- Any records on the purchase of the property for the last three years.
- Information on any written private agreements, such as a shared driveway with a neighbor.
- Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
- Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
How does an appraiser define "Market Value"? (Top)
In real estate appraising, Market Value is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Does the appraisal belong to the bank or the consumer? (Top)
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 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 hiring the appraiser for things outside securing a mortgage.
In these cases, the appraiser may define 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.
Are some home improvements more worthwhile than others? (Top)
The added value of a particular amenity truly depends on the local 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 were second, returning 85%.
Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.
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