T.R. Moore & 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 evaluation that leads to an opinion of value. This opinion or estimate is discerned through a formal method that usually uses three "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 house, minus age and physical deterioration, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with making a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does(See list of FAQ's) An appraiser provides a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers demonstrate their expert conclusions in appraisal reports.
Why would a person require a real estate appraisal?(See list of FAQ's) There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
Is an appraisal the same as a home inspection? (See list of FAQ's)Home inspectors do not estimate an opinion of value and do not do appraisal reports. A third-party home inspector will investigate the structure of the home, from the roof to the foundation. The standard home inspector's report will include an evaluation of the condition 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?(See list of FAQ's) Simply put, it's like comparing Shakespeare to reality TV. What the CMA depends on are superficial trends. Appraisals use similar sales which are verifiable resources. Location and architectural costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the most significant factor is who's doing the report. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, state licensed professional who made a career on valuing properties in and around Maricopa County is behind the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the price of the home.
What are the contents of an appraisal report? (See list of FAQ's)Every appraisal must reflect a believable estimate of value and should identify the following:
Once the report has been completed, how can I have confidence that the value conclusion is valid?(See list of FAQ's) In communicating an appraisal report, each appraiser must make sure of the following:
Who hires an appraiser?(See list of FAQ's) Most of the time, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does T.R. Moore & Associates, Inc. get the data used to estimate values in Maricopa County or other areas?(See list of FAQ's) Compiling information is one of the primary occupations of an appraiser. Data can be categorized as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.
General data is received from a number of sources. To research recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.
Why do I need a professional appraisal?(See list of FAQ's) If you're making some sort of financial decision and the value of your home matters, you'll want an appraisal. 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. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI is short for for Private Mortgage Insurance. It covers the lender if a borrower doesn't pay on the loan and the market price of the house is lower than the balance of 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) We begin with an inspection of the home. 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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access items like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
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:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) 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 certainly entitled to a copy of the report - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.
This rule doesn't apply when a home owner engages an appraiser directly. In these cases, 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 use the appraisal for any purpose.
Which home renovations add the most to the price?(See list of FAQ's) Like all things real estate, this is dependent on a home's location. For example, putting in 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 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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.