FAQ What is an Appraisal? What is the importance of an Appraisal? How does an Appraisal differ from a home inspection? What is the Appraisal process? Why get an Appraisal? What should I do to prepare for an Appraisal? What is an Appraisal? A home appraisal is an independent valuation of a home to determine its market value. In general, a home appraisal is organized by a lender and is usually paid for by a buyer. All loans require an independent appraisal. The reason the lender requires an appraisal is that you may think a home is worth more money than it really is – leading you to make an offer that may be too high. If the appraiser leads the lender to believe the home is overvalued, the lender may feel this is a risk and may not grant you a mortgage. Basically, lenders want to protect themselves by ensuring the property you are considering buying with a loan from their institution is worth its market value. The appraisal helps ensure that you the buyer do not end up having negative equity on a home. Back to Top What is the importance of an Appraisal? Getting a home appraised is extremely important for several reasons. As mentioned above, it can help you find out how much a property is worth. It can also help you lower your taxes and eliminate private mortgage insurance. A licensed appraiser can also help you with estate planning, analyzing the feasibility of proposed improvements, determining the best use of a property and with insurance valuations. Back to Top How does an Appraisal differ from a home inspection? You must keep in mind that an appraisal is different than a professional home inspection. An appraiser formulates an opinion of a property's value for a lender, while an inspector educates the buyer about the condition of the home and its components. Back to Top What is the Appraisal process? An appraiser's duty is to inspect the property being appraised to determine the true status of that property. Toward this end, an appraiser will analyze market data, including both historic and current comparable sales, current offers, pending sales and proposed improvements to arrive at an appraised value for your home. The appraiser will also compare your property to the broader market. Depending on the purpose of the appraisal, the appraiser might choose to weigh different factors more heavily than others. In generating his appraisal, an appraiser will pull from a wide variety of sources, including a local Multiple Listing Service, local real estate professionals, county courthouse records, private data vendors, owner interviews, and his or her own personal knowledge. The quality and reliability of each piece of information will be weighed by the individual appraiser. Back to Top Why get an Appraisal? There are several reasons why you may need or want to get a home appraisal, including: Pre-Sell/Purchase Decisions – Before you decide to sell or purchase a home, you must decide how much you should buy or sell it for. If you are the seller, you may want to find out so you can decide whether it is worth it or not to paint the house or put in new carpeting. If you are the buyer, you may want to have someone uninvolved with the transaction help you determine if you are paying too much (or too little) for the house. PMI Removal – Private Mortgage Insurance (or PMI) is supplemental insurance that many lenders ask homeowners to purchase when the amount loaned on the property is more than 80% of the value of the house. The Homeowners Protection Act of 1998 requires that lenders drop the PMI payments when the loan to value ratio conditions have been met, however many require an appraisal to support the homeowner's assertions of the value increase. Getting an appraisal and dropping your PMI payments can significantly reduce your monthly mortgage payments. Estate Planning – The loss of a loved one is a difficult time, and often this sad event is complicated by difficult decisions regarding the disposition of the estate. Settling an estate usually requires an appraisal opinion to establish fair market value for the residential property involved. Divorce Settlement – Finalizing a divorce involves many decisions, including property disposition. There are generally two options: the house can either be sold and the proceeds divided, or one party can buy the other party out. In either case, one or both parties should have an appraisal of the residence. Whatever your reason, chances are you will have to go through a home appraisal at some point in your life. Most lenders are required by federal and state laws and current banking regulations to obtain an appraisal for most loans secured by real estate and all appraisals made for mortgage loans from federally insured lenders must be made by a licensed or certified appraiser. Back to Top What should I do to prepare for an Appraisal? There are several factors that can affect the appraised value of your home, including whether or not: it is well maintained inside and out, it is located in a good school district, additions fit well into the existing house, properties throughout the neighborhood are well maintained, it is the largest house on the block (or the most improved), the style of the house conforms with those in the neighborhood or zoning changes are expected. For those items listed above that you can improve on, such as maintaining your house (which includes repairing leaky faucets, painting over spots on the wall, etc.), it is well worth the effort to do so prior to scheduling the appraisal. Once you decide to schedule the appraisal, you should try to gather all of the following documents to present to your appraiser upon his or her arrival: a survey or plat map of the house and land, your most recent tax bill or a legal description of the property, a copy of your deed, copies of any recent home inspection reports, or other recent reports, such as for termites, Homeowners Association information and fees and a list of major home improvements (including date and permit confirmation, if necessary). Also prior to the scheduled appraisal, you should also make sure that all areas of your home are accessible and that your home is as clean and orderly as possible to make a good impression on the appraiser. Back to Top |Home| |Services| |Order | |Downloads| |Terms| |FAQ| Copyright © 2008 Hallbick Appraisals