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Frequently Asked Questions

  • What Is an Appraisal?

    An appraisal is, essentially, an estimate of what a home’s value is worth. Generally speaking, there are three common ways to come to this estimate. One is the Cost Approach, which is based on how much it would cost to replace the property, subtracting things such as deterioration and adding in the value of the land. The second is the Sales Comparison Approach, which involves determining what similar properties have sold for and using that as the basis of the valuation. And the last is the Income Approach, which determines the value of the property based on how much income the building produces.

  • What does an appraiser do?

    An appraiser can provide clients with an unbiased assessment of a property’s value based on a number of different factors. This information is compiled into a report, which is given to the client.

  • Why get an appraisal?

    There are many reasons why someone might wish to schedule an appraisal, some of which include:

    • Getting a loan.
    • Lowering property taxes.
    • Settling an estate.
    • Finding a solid listing price.
    • Defending your rights in a condemnation case.
    • Giving yourself a leg up as a buyer.
    • Helping with a civil case.
    • IRS requirements.
  • What’s the difference between an appraisal and a home inspection?

    While both valuable tools, appraisals and home inspections have different purposes. A home inspection is used to determine whether there are any defects in the property; it doesn’t give an estimation of the property’s worth. An appraisal is the only thing that will give you a solid idea of a property’s value.

  • What’s the difference between an appraisal and a Comparative Market Analysis (CMA)?

    There is actually a significant difference between the two. To put it simply, appraisals are more reliable; they are performed by certified and licensed appraisers and utilize solid data to create a comprehensive report that contains everything from comparable sales to neighborhood and construction values. CMAs are based more on fluctuating trends and provide non-specific figures, often making them less useful.

  • What’s included in an appraisal report?

    Every report needs to contain:

    • The name of anyone who intends to use the appraisal.
    • What the appraisal is being used for.
    • The type of valuation and its definition.
    • The effective date of the appraisal.
    • Any relevant characteristics, such as the location and physical attributes.
    • Any non-real estate items included in the appraisal.
    • All known easements, restrictions, contracts, leases, or other similar things.
    • Any divisions of interest.
    • The scope of the work used to complete the appraisal.
  • How do you know the value indicated in the appraisal is accurate?

    Your appraiser is held to high standards and must ensure:

    • That any information used to create the analysis was appropriate for the property and task at hand.
    • That no significant errors were committed.
    • That they provided thorough, careful work, not a negligent or careless assessment.
    • That they were able to provide a credible, supportable appraisal report.

    In addition, most states will require the appraiser to be licensed or certified. The certification requires extensive training to ensure that the appraiser offers unbiased, accurate valuations; officially obtaining a license or certification means that the appraiser will have extensive education and plenty of experience. Additionally, there are strict standards of practice (the Uniform Standards of Professional Appraisal Practice (USPAP)) that appraisers are required to adhere to.

  • How are appraisers certified?

    While the requirements vary by state, obtaining a certification generally requires extensive coursework, tests, and practical experience. Even after obtaining a license, the appraiser must continue taking courses to make sure the license stays current.

  • Who do appraisers work for?

    Most of the time, they work for lenders, who will contract them to estimate the value of a property for a real estate transaction. In addition, they may help legal professionals and others in matters such as litigation, estate settlements, tax-related concerns, and investment decisions.

  • How does an appraiser estimate the value of a home?

    The appraiser will generally get this information based on two different subsets of data: specific information about the home and general information from other useful sources. The specific information generally includes things such as the location, condition of the home, amenities, and size. General data may be gathered through the local MLS, tax records, or other public documents.

  • Why should you get an appraisal?

    Appraisals can help with any sort of major financial decision—for example, if you plan to sell a home. By figuring out the actual value of the property, you can make sure you’re making a smart financial decision.

  • What’s PMI, and how do you get rid of it?

    Private Mortgage Insurance (PMI) is a type of insurance that’s added to your mortgage if you pay less than 20% of the overall price of a home for a down payment. Once the equity in the home hits 20%, you can generally remove PMI from your mortgage.

  • How should you get ready for your appraisal?

    It can be helpful to make sure the appraiser has easy access to the house’s interior since one of the first things they’ll need to do is inspect the property. You should trim any bushes that might make measurements difficult, make sure the appraiser can have easy access to things like water heaters and furnaces, and make sure the appraiser has easy access to any crawl spaces. In addition, it can be helpful to have certain documents available, including a survey of the house and property, tax records and a recent bill, a deed or title report, any personal property that will be sold with the home (if applicable), and a copy of the original plans.

  • What’s market value?

    Market value is, essentially, what the home should reasonably sell for in a fair and open market. Generally speaking, this value assumes that both the buyer and seller are well-informed about the property, they are acting in their own best interests, the property’s been on the market for a reasonable amount of time, the property is being paid for in USD, and there aren’t any extenuating factors that might complicate the price.

  • Who owns the appraisal report?

    Most of the time, the lender owns the report, despite the homeowner paying for it as part of the closing costs; however, the owner may still request a copy of the report. The only exception is when an owner works with an appraiser directly.

  • What sort of renovations will add the most value to your home?

    This is going to vary depending on the home and the location. However, it has been proven that kitchen renovations tend to add the most value, with bathrooms at a close second.

Myths

It is mandated by the government that an appraiser needs to be state-licensed to produce appraisals for federally-supported real estate sales in Arizona. You have the ability to request a copy of the completed report from your lending agency. Contact Advanced Appraising, Ltd. if you’d like more information on how an appraisal works.

  • Myth: The estimated value of a property is required to be exactly the same as the market value.

    Fact: It is probable that Arizona, like most states, supports the suggestion that the assessed value is no different from the market value; however, this is not always true. Interior reconstruction that the assessor is unaware of and a lack of reassessment of nearby properties are prime examples of why this occurs.

  • Myth: A property's estimated value with vary depending on whether the appraisal is ordered for the buyer or the seller.

    Fact: The appraiser has no personal interest in the result of the appraisal and should conduct the appraisal impartially, regardless of who they’re providing the appraisal to.

  • Myth: The replacement cost of the property is the same as the market value.

    Fact: The way market value is found is based on what a home buyer would be willing to pay a willing seller for a house without being under the influence of any outside group to buy or sell. The replacement cost, on the other hand, is the dollar amount required to rebuild a home in-kind.

  • Myth: There are specific methods that real estate appraisers use to show the opinion of the value of a house, such as the price per square foot.

    Fact: There are many different formulae that an appraiser will use to make an in-depth analysis of every factor in consideration of the home, such as the size, location, condition, how close it is to undesirable facilities, and the value of recently sold comparable houses.

  • Myth: As houses appreciate by a certain percentage - in a robust economic state - the houses around the properties should increase at the same rate.

    Fact: All appreciation of worth is on a case-by-case basis, determined by information on relevant conditions and the data of comparable houses.

  • Myth: The home's outside is determinate of the actual price of the property; it is unnecessary to do an interior inspection.

    Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the home on a variety of factors based on area, condition, improvements, amenities, and current market trends. As you can see, none of these variables can be found simply by inspecting the property from the outside.

  • Myth: Because consumers pay for the appraisal when applying for loans to buy or refinance their house, they own their appraisal.

    Fact: Unless a lending agency releases its interest in the appraisal report, it is legally owned by the lending company that purchased the appraisal. However, consumers must be provided with a copy of the report upon written request through the Equal Credit Opportunity Act.

  • Myth: Consumers need not worry about what is in their appraisal document so long as it exceeds the needs of their lending company.

    Fact: Having a copy of an appraisal is incredibly important, just in case there are concerns about accuracy. In addition, it can be useful for other reasons since it can provide you with information on things such as the square footage of a property or its physical description.

  • Myth: There is no reason to hire an appraiser unless you are trying to get an estimate of the cost of a property during a sales transaction involving a lending agency.

    Fact: Based on their qualifications and designations, appraisers can and often do provide a variety of different services. This may include everything from tax assessment reviews to dispute resolution.

  • Myth: An appraisal report is the same as a home inspection report.

    Fact: A home inspection report has a completely different purpose than an appraisal report. The function of an appraisal report is to conclude upon an opinion of fair market value during the appraisal process and the production of the report. The task of a home inspector is to find the condition of the home and its major components, then provide a report on their findings.

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