L.I. Property Services Corp. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) The procedure of creating an appraisal deals with an investigation which leads to an opinion of value. The appraiser will use a several "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the home, less the age and physical deterioration, adding the land value. Another of the methods is the Sales Comparison Approach - which involves discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.
What does an appraiser do?(See list of FAQ's) An appraiser generates a fair and credible determination of market value, in the support of real estate transactions. Appraisers demonstrate their professional findings in appraisal reports.
What would cause me to need services from L.I. Property Services Corp.?(See list of FAQ's) There are a lot of reasons to get an appraisal from L.I. Property Services Corp. with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
How is an appraisal different than a home inspection? (See list of FAQ's)Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the property from basement to top. Commonly, a home inspection report will explain the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, 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 other visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(See list of FAQ's) Frankly, they have nothing in common. The CMA uses market trends to create most of their business. The appraisal is based on similar definite comparable sales. The appraisal report will also include area and construction prices. 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 most significant factor is who's doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. A certified, state licensed professional who bases their livelihood on valuing properties in and around Nassau County creates the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.
What does the appraisal report contain? (See list of FAQ's)Every appraisal should indicate a credible estimate of value and must identify the following:
After completing the appraisal, how can I have a guarantee that the value conclusion is accurate?(See list of FAQ's) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who do appraisers work for?(See list of FAQ's) Commonly, appraisers are called upon by mortgage 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 an appraiser get the information used to estimate values in Nassau County or other areas?(See list of FAQ's) One of the main things an appraiser does is to gather data. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is received from a many places. To find out about recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When 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 getting an independent appraisal. 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. Knowing its true value means you can make smart financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(See list of FAQ's) PMI is an acronym for Private Mortgage Insurance. This additional plan guards the lender if a borrower defaults on the loan and the value of the property is lower than what is owed 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.
How do I get ready for the appraiser?(See list of FAQ's) We start 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 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 outside walls.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(See list of FAQ's) 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 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 situations, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.
Which home renovations add the most to the price?(See list of FAQ's) 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 weren't far behind, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.