Central Iowa Appraisers has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(See list of FAQ's) An appraisal is an estimation that concludes with an opinion of value. The real estate appraiser will typically use a few "approaches," typically three, to conclude 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 house, less the depreciation and physical deterioration, plus the land value. Another of the methods is the Sales Comparison Approach - which involves discovering a comparison to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a house. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
Describe what an appraiser does(See list of FAQ's) An appraiser produces a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers illustate their analysis in appraisal reports.
What would cause me to request services from Central Iowa Appraisers?(See list of FAQ's) There are a lot of reasons to get an appraisal from Central Iowa Appraisers with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an 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 are not appraisers. The point of a home inspection is to evaluate the structure of the home from foundation to rooftop. The general property inspector's report will include an evaluation of the condition of the home's heating system, 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.
Is an appraisal the same as a comparative market analysis(CMA)?(See list of FAQ's) Simply put, it's like comparing Shakespeare to reality TV. The CMA uses market trends to conduct most of their business. Appraisals use comparable sales which are valid resources. Area and construction values are also precedent in an appraisal. 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.
But the biggest difference is the person behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, Iowa licensed professional who made a career on valuing homes in and around Polk County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for work they perform, regardless of their value conclusion.
What are the contents of an appraisal report? (See list of FAQ's)Each appraisal should demonstrate a believable estimate of value and will clearly state the following:
Upon completion of the appraisal, how can I have assurance that the value conclusion is veritable?(See list of FAQ's) In communicating an appraisal report, each appraiser must make sure of the following:
Who engages the services of appraisers?(See list of FAQ's) Most of the time, appraisers are employed by mortgage lenders to estimate the value of real estate involved in a loan transaction - to make sure the house is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Central Iowa Appraisers get the data used to estimate values in Polk County or other areas?(See list of FAQ's) One of the most important things an appraiser does is to collect 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 received from a numerous sources. To find out about recently sold homes to be used as "comps", an appraiser will often go to 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 last but not least, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser?(See list of FAQ's) 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 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 home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it?(See list of FAQ's) PMI stands for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the value of the house is less than the balance of 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.
Should I do anything in advance of the appraisal appointment(See list of FAQ's) The first step in most appraisals is the home inspection. During this process, we 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 bushes so we can be free to get an accurate measurement of exterior 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:
Does the appraisal belong to the bank or the consumer?(See list of FAQ's) 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 entitled to a copy of the appraisal - it's usually included 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may state the purpose of the appraisal; 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.
How can I get the most ROI out of home improvements?(See list of FAQ's) It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
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 were second, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.