Fatzer Appraisal Group, Inc. has answers to "Frequently Asked Questions"
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Fatzer Appraisal Group, Inc. is always more than happy to handle any concerns you might have about appraisals in Sacramento County.
Feel free to contact us today.
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Describe an appraisal
Describe what an appraiser does
What would cause me to require your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the appraisal, what guarantee is there that the value conclusion is veritable?
How difficult is it to become certified?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Sacramento County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
What does "Market Value" mean?
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?
Describe an appraisal (Go to list of questions)
The process of writing an appraisal deals with an estimation which leads to an opinion of value.
There are three "common approaches to value" which assists the appraiser conclude this opinion or valuation.
One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, minus age and physical dilapidation, adding the land value.
The Sales Comparison Approach involves finding comparable homes in close proximity and figuring out the value based on making a comparison of those prior sales to the house in question.
Usually, the Sales Comparison Approach is the most definite indicator of market value of a house.
One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.
Describe what an appraiser does (Go to list of questions)
An appraiser forumlates a fair and credible determination of market value, often in the context of a real estate sale.
Appraisers show their conclusions in appraisal reports.
What would cause me to require your services? (Go to list of questions)
There are many reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions.
Other reasons for purchasing an report include:
- To get a loan.
- To reduce your property taxes.
- To show a homeowner has 30% equity and remove insurance.
- To fight improperly assessed property taxes.
- To deal with an estate.
- To offer you a negotiating tool when purchasing real estate.
- To figure out an honest property value when selling real estate.
- To ensure parties are provided just compensation in eminient domain cases.
- Government agencies such as the IRS require an appraisal on every property.
- If you ever find yourself in a lawsuit.
If you need a more detailed explanation of the appraisal process, please click here.
Appraisers do not do perform house inspections and are not home inspectors.
The point of a home inspection is to evaluate the structure of the home from bottom to top.
For the most part, a home inspection report will explain the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)
Frankly, they share nothing in common.
The CMA relies on indistinct trends in the market.
The appraisal depends on similar verifiable comparable sales.
In addition, the appraisal verifies other factors like condition, location and building prices.
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.
Who's behind the report is actually the biggest difference between a CMA and an appraisal.
Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's.
The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties.
Further, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the price of the home.
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:
- The client and other intended users.
- How the appraisal is supposed to be used.
- The reason for the assignment.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
- Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible factors.
- All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
- Division of interest, such as fractional interest, physical segment and partial holding.
- The scope of work considered when completing the job.
For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report
After completing the appraisal, what guarantee is there that the value conclusion is veritable? (Go to list of questions)
In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
- That the information analysis implemented in the appraisal was proper.
- That critical errors of omission or commission were not committed individually or collectively.
- That appraisal services were delivered in a careful and cognizant fashion.
- The final appraisal report was clear, sound and conclusive.
To become a state licensed appraiser, there are extensive education requirements as well as real world experience that must be attained.
In addition, appraisers must abide by a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Go to list of questions)
Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and experience working under a supervisor.
Once an appraiser is licensed, he/she must then complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.
Who employs appraisers? (Go to list of questions)
Typically, appraisers are hired by lenders to estimate the value of property involved in a loan transaction.
Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Sacramento County or other areas? (Go to list of questions)
One of the primary tasks an appraiser must accomplish is to assimilate property data.
Data can be split into Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is gathered from a variety of places.
To look up recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service.
To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays.
Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser? (Go to list of questions)
If you're involved in any kind of financial decision and the value of your home is relevant, you'll want a full appraisal.
For those selling a home, you'll want to figure out the 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 Fatzer Appraisal Group, Inc. is the best way to ensure assets are split up evenly.
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 an acronym for Private Mortgage Insurance.
This supplementary policy protects the lender in case a borrower defaults on the loan and the market price of the home 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.
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Has your real estate appreciated since you first purchased? Contact Fatzer Appraisal Group, Inc. today at 916.492.8990 to see if you can cancel your Private Mortgage Insurance premium.
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Does the appraiser need anything from me in advance? (Go to list of questions)
The first step in most appraisals is the home inspection.
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 the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would get in our way while we measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
- A survey or plot map of the property and building (if readily available).
- Title policy that describes encroachments or easements.
- Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
- Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
- A list of "proposed" improvements if the property is to be appraised "as complete".
What does "Market Value" mean? (Go to list of questions)
In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Who actually owns the appraisal report? (Go to list of questions)
In most real estate transactions, the appraisal is ordered by the lender.
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 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 stated otherwise, the home owner can do whatever they want with the appraisal.
Are some home improvements more worthwhile than others? (Go to list of questions)
A home's location - what city it is in and even what part of that city - is key to this popular question.
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
No matter where you go, however, renovating a kitchen is almost always a safe investment.
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, returning 85%.
On the contrary, something that may not increase your value would be painting just for the sake of redecorating.
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