Frontline Appraisals, LLC has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal" (Go to list of questions)The procedure of writing an appraisal report deals with an investigation which leads to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, minus age and physical dilapidation, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which concerns concluding a comparison to similar houses nearby. The Sales Comparison Approach is commonly the most definitive and clearest indicator of a liklely sales price for a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.
Describe what an appraiser does (Go to list of questions)An appraiser offers an unprejudiced and well supported assessment of market value, to be used in making real estate transactions. Appraisers document their professional analysis in appraisal reports.
What would cause me to need a real estate appraisal? (Go to list of questions)There are a lot of reasons to order an appraisal from Frontline Appraisals, LLC with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an report include:
How is an appraiser different than a home inspector? (Go to list of questions)The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a property, from the roof to the bottom. Generally, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible 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? (Go to list of questions)Frankly, they share nothing in common. What the CMA depends on are vague trends. The appraisal relies on specific verifiable comparable sales. Also, the appraisal looks at other factors like condition, area and construction costs. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
The person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the value of the home.
What are the contents of an appraisal report? (Go to list of questions)Every report must indicate a supported estimate of value and should clearly state the following:
Once the appraisal has been delivered, how can I have certainty that the value indicated is veritable? (Go to list of questions)In communicating an appraisal report, each appraiser must make sure of the following:
Who are an appraiser's customers? (Go to list of questions)Mortgage lenders are an appraiser's typical client, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
Where does an appraiser get the information used to estimate values in Cook County or other areas? (Go to list of questions)Compiling information is one of the primary tasks an appraiser performs. Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.
General data is received from a many 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 look at tax records and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.
Why should I hire a licensed appraiser? (Go to list of questions)An appraisal is a valuable tool whenever the value of your home is relevant to a 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. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Frontline Appraisals, LLC is the best documentation to ensure assets are split up fairly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.
What exactly is PMI and how can I get rid of it? (Go to list of questions)PMI is short for for Private Mortgage Insurance. This additional policy protects the lender in case a borrower defaults on the loan and the market price of the home is lower than the loan balance. 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.
Does the appraiser need anything from me in advance? (Go to list of questions)We begin with an inspection of the home. During this process, we 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 landscaping so we can be free to get an accurate measurement of exterior walls.
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? (Go to list of questions)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? (Go to list of questions)For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is entitled to a copy of the appraisal - it's usually included 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 hires an appraiser directly. In these scenarios, the appraiser may stipulate 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.
Are some home improvements more worthwhile than others? (Go to list of questions)The added value of a particular amenity truly depends on the local market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.
No matter where you go, however, renovating a kitchen is almost always a safe move. 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, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.