Jeffrey C. Leger has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Back to top) An appraiser performs an estimation that generates an opinion of value. The real estate appraiser must use a several "approaches," typically three, to conclude the estimation of market value. One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which involves figuring a comparison to comparable properties nearby. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a property. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.
What does an appraiser do?(Back to top) An appraiser generates an unbiased and well supported assessment of market value, in the support of real estate transactions. Appraisers demonstrate their professional investigation in appraisal reports.
What are the reasons I would need your services?(Back to top) There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for getting an report include:
Is an appraisal the same as a home inspection? (Back to top)Appraisers do not do complete home inspections and are not home inspectors. A third-party home inspector will judge the structure of the house, from the top to the foundation. Generally, a home inspection report will evaluate 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 integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Back to top) Simply put, it's apples and oranges. The CMA depends on vague trends in the market. Appraisals use comparable sales which are valid resources. The appraisal report will also include neighborhood and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
Who's behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents produce 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 bases a career on valuing homes in and around Hampden County creates the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.
What's in an appraisal report? (Back to top)Each appraisal must demonstrate a believable estimate of value and will clearly state the following:
Upon completion of the report, what assurance is there that the final number is legitimate?(Back to top) In the documentation of an appraisal, each appraiser must ensure the following:
Who hires an appraiser?(Back to top) Typically, appraisers are called upon by lenders to estimate the value of a house involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Hampden County or other areas?(Back to top) One of the main tasks an appraiser performs is to compile property data. Data can be split into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is collected from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.
How can a licensed appraiser help me?(Back to top) Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Jeffrey C. Leger is the best documentation to ensure assets are split up properly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is an acronym for Private Mortgage Insurance. PMI guards the lender in case a borrower defaults on the loan and the value of the property is less than what is owed on the loan. 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.
Do you need anything from me in advance?(Back to top) We start with an inspection of the property. 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. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes 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:
What is "Market Value?"(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(Back to top) In most real estate transactions, the appraisal is ordered by the lender. 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 certainly entitled to a copy of the appraisal - 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.
The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may define how the appraisal can be used; 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.
How can I get the most ROI out of home improvements?(Back to top) 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 most value returned 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 weren't far behind, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.