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Who Actually Owns the
Appraisal Report?
In most real estate transactions, the appraisal is ordered by the lender. While
the home 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
home buyer is entitled to a copy of the report - it's usually included with all
of the other closing documents - but is not entitled to use the report for any
other purpose without permission from the lender.
What is the difference between an
appraisal and a home inspection?
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 mechanical systems of a house, from the roof to the foundation.
The standard home inspector's report will include an evaluation of the condition
of the home's heating system, 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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What does the appraisal report
contain?
Each report must reflect a credible estimate of value and must identify the
following:
The client and other intended users.
The intended use of the report.
The purpose of the assignment.
The type of value reported and the definition of the
value reported.
The effective date of the appraiser's opinions and
conclusions.
Relevant property characteristics, including location
attributes, physical attributes, legal attributes, economic attributes, the
real property interest valued, and Non real estate items included in the
appraisal, such as personal property, including trade fixtures and
intangible items.
All 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 used to complete the assignment.
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After completing the report, what
assurance is there that the value indicated is valid?
In communicating an appraisal report, each appraiser must ensure the
following:
That the information analysis utilized in the appraisal
was appropriate.
That significant errors of omission or commission were
not committed individually or collectively.
That appraisal services were not rendered in a careless
or negligent manner.
That a credible, supportable appraisal report was
communicated.
Florida requires that real estate appraisers are state licensed or
certified. The state licensed or certified appraiser is trained to render an
unbiased opinion based upon extensive education and experience requirements.
To become licensed or certified, appraisers must fulfill rigorous education
and experience requirements. In addition, appraisers must abide by a strict
industry code of ethics and comply with national standards of practice for
real estate appraisal. The rules for developing an appraisal and reporting
its results are insured by enforcement of the Uniform Standards of
Professional Appraisal Practice (USPAP).
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How are
appraisers certified?
Regulations regarding licensing and certification of Real Estate Appraisers are
set by the state of Florida. Licensing and certification is most often
associated with many hours of coursework, tests and practical experience. Once
an appraiser is licensed, he or she is required to take continuing education
courses in order to keep the license current.
Where
does an appraiser get the information used to estimate value?
Gathering data is one of the primary roles of an appraiser. Data can be divided
into Specific and General. Specific data is gathered from the home itself.
Location, condition, amenities, size and other specific data are gathered by the
appraiser during an inspection.
General data is gathered from a number of sources. Local Multiple Listing
Services (MLS) provide data on recently sold homes that might be used as
comparables. Tax records and other public documents verify actual sales prices
in a market. Flood zone data is gathered from FEMA data outlets. And most
importantly, the appraiser gathers general data from his or her past experience
in creating appraisals for other properties in the same market.
Why do
I need a professional appraisal?
Anytime the value of your home or other real property is being used to make a
significant financial decision, an appraisal helps. If you're selling your home,
an appraisal helps you set the most appropriate value. 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. A home is often the single,
largest financial asset anybody owns. Knowing its true value means you can the
right financial decisions.
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How do I get ready for the
appraiser?
The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure the appraiser has
easy access to the exterior of the house. Trim any bushes and move any items
that would make it difficult to measure the structure. On the inside, make
sure that the appraiser can easily access items 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:
A survey of the house and property.
A deed or title report showing the legal description.
A recent tax bill.
A list of personal property to be sold with the house if
applicable.
A copy of the original plans.
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What is
''Market Value?''
Market value or fair market value is the most probable price that a property
should bring (will sell for) in a competitive and open market under all
conditions requisite to a fair sale, the buyer and seller, each acting
prudently, 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: (1) buyer and seller are typically motivated; (2) both parties are well
informed or well advised; (3) a reasonable time is allowed for exposure to the
open market; (4) payment is made in terms of cash in U.S. dollars or in terms of
financial arrangements comparable thereto; and (5) 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.
Which home renovations add the most to the price?
The answer to this is different depending upon the location of the home.
Different markets value amenities differently. Adding a central air conditioner
in Houston, Texas may add significant value, while putting one in a home located
in Buffalo, New York might not have much impact.
As a rule, the most value returned from renovating a home comes in the kitchen.
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 were second, returning
85%.
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Why would a person need a home appraisal?
There are many reasons to obtain an appraisal with the most
common reason being real estate and mortgage transactions. Other
reasons for ordering an appraisal include:
To obtain a loan.
To lower your tax burden.
To establish the replacement cost of insurance.
To contest high property taxes.
To settle an estate.
To provide a negotiating tool when purchasing real estate.
To determine a reasonable price when selling real estate.
To protect your rights in a condemnation case.
Because a government agency such as the IRS requires it.
If you are involved in a lawsuit.
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