Mike Noble Appraisals has answers to "Frequently Asked Questions"
Mike Noble Appraisals is always eager to elaborate on any questions you might have about appraisals or real estate in Montgomery and Elmore County.
Feel free to contact us today.
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The appraisal process is an estimation that generates an opinion of value.
The real estate appraiser will typically use a number of "approaches," typically three, to conclude the estimation of market value.
The Cost Approach is one of the approaches that appraisers use to find the value of a property; it involves discerning what the improvements would cost without physical degradation, plus the land value.
The most common approach in figuring the value of a home is the Sales Comparison Approach which deals with making a comparison to similar properties close by.
The Sales Comparison Approach is commonly the most definitive and best indicator of value for a residence.
The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.
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An appraiser provides a fair and credible assessment of market value, to be used in making real estate transactions.
Appraisers exhibit their expert investigation in appraisal reports.
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There are many reasons to get an appraisal from Mike Noble Appraisals with the most common reason being real estate and mortgage transactions.
Some other reasons for getting an appraisal report include:
To obtain a loan.
If you would like to lower your property tax obligations.
To demonstrate a homeowner's acquired equity and remove insurance.
To contest improperly assessed property taxes.
To settle an estate.
To offer you a negotiating tool when purchasing a home.
To find an honest price when selling real estate.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
If you are ever involved in a civil case.
For a more detailed explanation of the appraisal process click here.
Appraisers do not do complete residential property inspections and are not home inspectors.
A third-party home inspector will evaluate the structure of the home, from the roof to the foundation.
The general house inspector's report will contain an evaluation of the integrity of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
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To be honest, they share nothing in common.
The CMA relies on indefinite trends in the market.
The appraisal depends on specific definite comparable sales.
Location and building costs are also a priority in an appraisal.
The CMA will provide a non-specific figure.
Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is hands down the biggest difference between a CMA and an appraisal.
Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation.
A certified, state licensed professional who made a career on valuing homes in and around Elmore County is behind the appraisal.
Moreover, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.
Every report must reflect a credible value opinion and will identify the following:
Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the assignment.
The type of value reported and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible factors.
Any 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 to complete the assignment.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report
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In the documentation of an appraisal, each appraiser must ensure the following:
The appraisal used a suitable analysis of the data.
Whether individually or collectively, there were no significant errors contained in the appraisal, nor any material details left out.
That appraisal services were delivered in a careful and conscientious manner.
That a credible, defensible appraisal report was conferred.
To become a state licensed appraiser, there are extensive education requirements as well as experience that must be logged - all with the objective of being able to provide unbiased value opinions.
Plus, appraisers must follow a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
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Most of the time, appraisers are hired by lenders to estimate the value of real estate involved in a loan transaction.
Attorneys and CPAs also hire appraisers for divorce and estate settlements.
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One of the most important things an appraiser does is to collect data.
Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.
General data is gathered from a numerous places.
Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables.
To verify actual sales prices, we use tax records and other public documents that are usually online nowadays.
Appraisers routinely need 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 product.
And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other properties in the same market.
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An appraisal is a valuable tool whenever the value of your home is pertinent to some financial decision.
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.
If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly.
Simply put, a home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
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PMI stands for Private Mortgage Insurance.
It takes care of the lender if a borrower doesn't pay on the loan and the market price of the home 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.
The savings from dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Mike Noble Appraisals when it comes to analyzing real estate appreciation in Montgomery and Elmore County. Contact us today.
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We start with an inspection of the home.
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 condition of its amenities.
Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.
To help speed things along plus ensure a more accurate report, try if possible to have the following items:
Any information on the purchase of the property for the last three years.
A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
Most recent real estate tax bill and or legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A list of "suggested" improvements when the property is being appraised "as complete".
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In real estate appraising, 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."
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For mortgage transactions, the lender orders 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.
This rule doesn't apply when a home owner engages an appraiser directly.
In these scenarios, 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 use the appraisal for any purpose.
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Like all things real estate, this is dependent on a home's location.
For example,
putting in 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 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 weren't far behind, yielding 85%.
Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.
Mike Noble Appraisals P.O. Box 241014 Montgomery, AL 36124
