Frequently Asked Questions
Q: What exactly is an appraisal?
A: An appraisal is an opinion of
value. The appraiser
provides an unbiased opinion of market value that can be used for
real estate transactions.
The appraiser inspects the property and analyzes the market
data. There are three
common approaches to value in an appraisal: the
Cost Approach, the
Sales Comparison Approach,
and the Income Approach.
The Cost Approach
is an estimate of the replacement cost of the improvements added to
the land value minus depreciation (physical, functional and
economic). The
Sales Comparison Approach
involves weighing at least three comparable properties to the
subject and making adjustments for their differences.
This approach is the most common way to arrive at a value
conclusion, especially in single family homes.
The Income Approach
determines a value based on the income producing abilities of the
property. This is the
approach most commonly used for income producing properties/rentals.
The most appropriate approach is then used to reconcile the value.
Q: How long does an appraisal usually
take to complete?
A: Appraisals are typically completed 24 hours after inspection. Appointments are set up same day as appraisal request when possible. All underwriting issues are handled the same day. Out of area, FHA, and complex appraisals may require additional time and/or fee.
Q: Is an interior inspection required?
A: An interior inspection is required on most appraisal types. Sometimes a lender will require only a 2055-Exterior only appraisal. In this case a “drive-by” appraisal may be used and an interior inspection in not needed.
Q: What is USPAP?
A: USPAP (Uniform Standards of Professional Appraisal Practice) is the appraisal standards set and regulated by the Appraisal Standards Board. USPAP is updated annually and contains the rules, statements, and advisory opinions that guide appraisers. Appraisers must follow USPAP under state law and are required to attend USPAP Update classes as part of Continuing Education.
Q: Can I transfer an appraisal to a new lender?
A: USPAP does not allow a transfer of an appraisal to a new lender without a release of the appraisal from the original lender. Appraisals are exclusive property of the lender named in the report. The lender is considered the “client” in an appraisal transaction. An appraisal being transferred to a new client is considered a new assignment. There can be an additional appraisal fee based on the additional work required.
Q: In addition to refinance and purchase transactions, what other services are provided?
A: PMI – Private Mortgage Insurance can be added to your monthly mortgage payments in cases where less than 20% of the value of the home is used for a down payment. An appraisal can be used to show that the loan to value ratio has changed. This can lead to lenders removing the PMI payment and significantly lowering your mortgage payment.
Divorce – An appraisal can be used to determine a fair market value when the property is to be sold with the proceeds divided, or when one party is buying out the other. One or both parties may want to have an appraisal done to determine an independent unbiased opinion of value. Court testimony to defend the appraisal may be required at additional charge.
Estate – Settling an estate usually require and appraisal to determine worth of the home at the time of death. We will be sensitive to the parties involved when appraising the home as the parties involved have suffered a loss.