Craig A. Nixon Appraisals has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Top) An appraisal report is a thought process that concludes with an opinion of value. The appraiser must use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves finding what the improvements would cost without physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. 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.
What does an appraiser do?(Top) An appraiser produces an unprejudiced and well justified determination of market value, often in the context of a real estate sale. Appraisers present their expert analysis in appraisal reports.
What are the reasons a person would need your services?(Top) There are a lot of reasons to obtain an appraisal from Craig A. Nixon Appraisals with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
What is the difference between an appraisal and a comparative market analysis (CMA)?(Top) Honestly, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal is reliant on similar proven comparable sales. Location and architectural values are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.
But the largest differentiator is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.
After completing the report, what assurance is there that the final number is veritable?(Top) In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(Top) Commonly, appraisers are hired by lenders to render a value opinion on property involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does Craig A. Nixon Appraisals get the data used to estimate values in Sacramento County or other areas?(Top) Collecting data is one of the primary things an appraiser does. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is received from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And most importantly, 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?(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 home, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Craig A. Nixon Appraisals is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Top) PMI is short for for Private Mortgage Insurance. This supplemental plan guards the lender in the event a borrower is unable to pay on the loan and the market price of the house is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal appointment(Top) We begin with an inspection of the home. 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. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
What is "Market Value?"(Top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Top) For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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.
The exception to this rule is when a home owner engages an appraiser directly. 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?(Top) The added value of a particular amenity truly depends on the local market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe move. 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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.