Byrd Appraisal Group, Inc. has answers to "Frequently Asked Questions"
Describe an appraisal
Describe an appraisal(Back to top) The appraisal process is an evaluation that generates an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or estimate. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves finding what the improvements would cost without physical depreciation, adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which deals with making a comparison to similar houses close by. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.
Describe what an appraiser does(Back to top) An appraiser generates an impartial and well justified assessment of market value, often in the context of a real estate sale. Appraisers illustate their conclusions in appraisal reports.
Why would a person require your services?(Back to top) There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
My agent performed a CMA for me. Is that the same as an appraisal?(Back to top) Simply put, it's like comparing opera to country. The CMA depends on indefinite trends in the market. The appraisal is reliant on similar definite comparable sales. Location and construction costs are also a priority 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 biggest difference is who's doing the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Texas licensed professional who bases a career on valuing homes in and around McLennan County is behind the appraisal. 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 outcome.
What can I expect to see in my appraisal report? (Back to top)The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
After completing the appraisal, what guarantee is there that the value conclusion is veritable?(Back to top) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who engages the services of appraisers?(Back to top) Mortgage lenders are an appraiser's most likely customer, requiring 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 divorce and estate settlements.
Where does an appraiser get the information used to estimate values in McLennan County or other areas?(Back to top) Compiling data is one of the primary tasks an appraiser performs. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.
General data is gathered from a many sources. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers often have to report when a property is in a flood zone, and 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 doing assignments for other houses in the same market.
How can a licensed appraiser help me?(Back to top) An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. For those selling a home, you'll want to figure out a 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 those settling an estate or divorce, an appraisal from Byrd Appraisal Group, Inc. is the best way to ensure assets are divided evenly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.
What exactly is PMI and how can I get rid of it?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. This added policy protects the lender in the event a borrower defaults on the loan and the market price of the home is lower than what is owed on 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.
Does the appraiser need anything from me in advance?(Back to 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and relocate 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.
The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
What does "Market Value" mean?(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Back 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.
This rule doesn't apply when a home owner hires an appraiser directly. In these scenarios, the appraiser may define 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.
How can I get the most ROI out of home improvements?(Back to top) A home's location - what city it is in and even what part of that city - is key to this popular question. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.