Goschie McCarthy & Associates, Inc. has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) An appraiser provides an estimation that leads to an opinion of value. The real estate appraiser must use a several "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that appraisers use to find value; it involves discerning what the improvements would cost without physical deterioration, plus the land value. The most common approach in finding the likely sales price of a home is the Sales Comparison Approach which deals with figuring a comparison to similar homes close by. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a residential property. The Income Approach is primarily 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 produce.
Describe what an appraiser does(See list of FAQ's) An appraiser offers a fair and credible determination of market value, in the support of real property transactions. Appraisers illustate their professional findings in appraisal reports.
What are the reasons a person would require a real estate appraisal?(See list of FAQ's) There are a lot of reasons to purchase an appraisal from Goschie McCarthy & Associates, Inc. with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
How is an appraiser different than a home inspector? (See list of FAQ's)Appraisers do not do provide house inspections and are not home inspectors. The purpose of a home inspection is to investigate the structure of the house from basement to rooftop. Commonly, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(See list of FAQ's) Frankly, they share nothing in common. The CMA utilizes market trends to generate most of their business. An appraisal utilizes comparable sales that can be proven by public record. In addition, the appraisal checks other factors like condition, location and building prices. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The credentials of the person creating the report is hands down the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Oregon licensed professional who has formed their livelihood on valuing properties in and around Lane County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their outcome.
What can I expect to see in my appraisal report? (See list of FAQ's)The main point of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the assignment has been delivered, how can I have assurance that the value conclusion is trustworthy?(See list of FAQ's) In communicating an appraisal report, each appraiser must ensure the following:
Who do appraisers work for?(See list of FAQ's) Typically, appraisers are hired by lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does Goschie McCarthy & Associates, Inc. get the information used to estimate values in Lane County or other areas?(See list of FAQ's) Compiling data is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at tax records and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
Why do I need a professional appraisal?(See list of FAQ's) An appraisal is a valuable tool anytime your home's value is relevant to some financial decision. When selling your house, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Goschie McCarthy & Associates, Inc. is the best way to ensure assets are split up evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI stands for Private Mortgage Insurance. It covers the lender in the event a borrower doesn't pay on the loan and the market price of the home 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.
Should I do anything in advance of the appraisal inspection(See list of FAQ's) The first step in most appraisals is the home inspection. During this process, the appraiser 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. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.
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"?(See list of FAQ's) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(See list of FAQ's) In most real estate transactions, the appraisal is ordered by the lender. 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 allowed 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 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?(See list of FAQ's) This really depends on where the home is. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!
As a rule, the best ROI from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms are right up there with kitchens, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.