APPRAISAL SERVICES Of HAWAII has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Return to top) The appraisal process is an evaluation that 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 depreciation and physical dilapidation, adding the land value. The Sales Comparison Approach involves searching for comparable homes in the vicinity and discerning value based on making a comparison of those homes to the home being appraised. The Sales Comparison Approach is commonly the most definitive and clearest indicator of a liklely sales price for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the capital produced by the property.
What does an appraiser do?(Return to top) An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers illustate their expert analysis in appraisal reports.
What are the reasons a person would request a real estate appraisal?(Return to top) There are many reasons to obtain an appraisal from APPRAISAL SERVICES Of HAWAII with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
How is an appraiser different than a home inspector? (Return to top)Home inspectors do not produce an opinion of value and do not do appraisal reports. A third-party home inspector will judge the structure of the house, from the roof to the bottom. Commonly, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, 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?(Return to top) To be blunt, it's night and day. What the CMA depends on are vague trends. Appraisals use similar sales which are valid resources. Area and construction prices are also precedent in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the most significant factor is the person creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, Hawaii licensed professional who made their livelihood on valuing properties in and around Honolulu County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their value conclusion.
What can I expect to see in my appraisal report? (Return to top)Every report should reflect a credible value opinion and must clearly state the following:
Once the appraisal has been delivered, how can I have assurance that the value conclusion is trustworthy?(Return to top) In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
Who hires an appraiser?(Return to top) Typically, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does APPRAISAL SERVICES Of HAWAII get the information used to estimate values in Honolulu County or other areas?(Return to top) Gathering information is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is collected from a many sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.
How can a licensed appraiser help me?(Return to top) An appraisal is a worthwhile whenever your home's value is pertinent to a financial decision. If you're selling your home, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from APPRAISAL SERVICES Of HAWAII is the best way to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it?(Return to top) PMI is an acronym for Private Mortgage Insurance. This supplemental policy takes care of the lender if a borrower defaults on the loan and the market price of the house is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Do you need anything from the homeowner in advance?(Return to top) We start with an inspection of the property. 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move 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:
How does an appraiser define "Market Value"?(Return to top) In real estate appraising, Market Value is commonly defined as:
Does the appraisal belong to the bank or the consumer?(Return to top) In most real estate transactions, the appraisal is ordered by the lender. 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 report - 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.
The exception to this rule is when a home owner hires an appraiser directly. In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price?(Return 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, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want
No matter where you go, however, renovating a kitchen is almost always a safe move. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms weren't far behind, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.