DLJ Appraisal Service, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal"(Go to list of questions) An appraisal is an inspection leading to an opinion of value. This opinion or estimate is concluded through a formal process that generally utilizes the three main "common approaches to value". The Cost Approach is one of the approaches that appraisers use to find the value of a home; it involves finding what the improvements would cost without physical depreciation, plus the land value. Easily the most common approach in figuring the value of a house is the Sales Comparison Approach which concerns figuring a comparison to similar houses nearby. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the income produced by the building.
What does an appraiser do?(Go to list of questions) An appraiser produces a professional, unbiased determination of market value, in the support of real property transactions. Appraisers reveal the details of their findings in appraisal reports.
Why would a person need services from DLJ Appraisal Service, LLC?(Go to list of questions) There are many reasons to purchase an appraisal from DLJ Appraisal Service, LLC with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Home inspectors do not figure out an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the property from bottom to attic. The usual home inspector's report will include an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Simply put, it's night and day. The CMA uses market trends to generate most of their business. An appraisal utilizes comparable sales that can be validated by public record. The appraisal report will also contain area and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased 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 does the appraisal report contain? (Go to list of questions)The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
After completing the report, how can I have confidence that the value conclusion is veritable?(Go to list of questions) In the documentation of an appraisal, each appraiser must ensure the following:
Who are an appraiser's customers?(Go to list of questions) Commonly, appraisers are employed by mortgage lenders to render a value opinion on a house involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does DLJ Appraisal Service, LLC get the information used to estimate values in Faulkner County or other areas?(Go to list of questions) One of the most important things an appraiser does is to gather data. Data can be categorized as either 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 numerous sources. To find out about recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, the appraiser assimilates 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?(Go to list of questions) 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 the 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. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from DLJ Appraisal Service, LLC is the best documentation to ensure assets are divided fairly. 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?(Go to list of questions) PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the value of the property is lower 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 inspection(Go to list of questions) The first step in most appraisals is the home inspection. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its features. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to items like furnaces and water heaters.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
Define "Market Value"(Go to list of questions) In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report?(Go to list of questions) 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 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.
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 noted otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements?(Go to list of questions) The added value of a particular amenity truly depends on the local market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
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 weren't far behind, returning 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.