Black Creek Appraisal Group, LLC has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Return to top) The method of writing an appraisal consists of an investigation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser come to this opinion or valuation. One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves searching for similar houses in close proximity and figuring out the value based on making a comparison of those prior sales to the property being appraised. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. The Income Approach is mainly used for figuring out 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.
Describe what an appraiser does(Return to top) An appraiser generates a fair and credible determination of market value, often in the context of a real estate purchase. Appraisers present their expert analysis in appraisal reports.
What are the reasons someone would need services from Black Creek Appraisal Group, LLC?(Return to top) There are many reasons to order an appraisal from Black Creek Appraisal Group, LLC with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
How is an appraisal different than a home inspection? (Return to top)The appraiser is not a home inspector nor does he/she do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the home from foundation to attic. For the most part, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
My agent performed a CMA for me. Is that the same as an appraisal?(Return to top) Simply, they share nothing in common. What the CMA depends on are ill-defined trends. The appraisal is reliant on similar definite comparable sales. Also, the appraisal looks at other factors like condition, area and replacement costs. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The credentials of the person behind the report is hands down the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, state licensed professional who made their livelihood on valuing properties in and around Macomb County is behind the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.
What are the contents of an appraisal report? (Return to top)The main purpose of an appraisal document 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:
Upon completion of the appraisal, how can I have confidence that the value indicated is accurate?(Return to top) In the documentation of an appraisal, each appraiser must make sure of the following:
Who engages the services of appraisers?(Return to top) Mortgage lenders are an appraiser's most likely client, needing their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Macomb County or other areas?(Return to top) One of the primary activities of an appraiser is to collect property data. Data can be described as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is received from a number of sources. To look up recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood system.
And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.
Why should I hire a licensed appraiser?(Return to top) If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. If you're selling your house, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Black Creek Appraisal Group, LLC is the best way to ensure assets are divided fairly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Return to top) PMI stands for Private Mortgage Insurance. This additional policy guards the lender in the event a borrower doesn't pay 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.
Should I do anything in advance of the appraisal appointment(Return to top) The first step in most appraisals is the property 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 status of its features. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping 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:
How does an appraiser define "Market Value"?(Return to top) 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?(Return 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 entitled to a copy of the appraisal - it's usually bundled 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 cases, the appraiser may define 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?(Return to top) This really depends on where the home is. 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 most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. 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.