Robinson Associates has answers to "Frequently Asked Questions"
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Robinson Associates is ready to address any concerns you might have about appraisals in Webb County.
Feel free to contact us today.
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Define the term "Appraisal"
What does an appraiser do?
Why would I request services from Robinson Associates?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Upon completion of the appraisal, what assurance is there that the final number is legitimate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Webb County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?
Define the term "Appraisal" (Return to top)
The appraisal process is an evaluation that leads to an opinion of value.
This opinion or estimate is figured by a formal method that generally utilizes three "common approaches to value".
One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value.
The Sales Comparison Approach deals with searching for comparable houses in close proximity and finding value based on comparing those properties to the house being investigated.
Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house.
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 generated by the property.
What does an appraiser do? (Return to top)
An appraiser generates an unbiased and well substantiated opinion of market value, often in the context of a real estate purchase.
Appraisers demonstrate their expert findings in appraisal reports.
Why would I request services from Robinson Associates? (Return to top)
There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions.
Some other reasons for purchasing an report include:
- To obtain a loan.
- If you would like to lower your property tax obligations.
- To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
- To contest improperly assessed property taxes.
- To handle an estate.
- To give you a leg-up when purchasing real estate.
- To figure out an honest price when putting your home on the market.
- 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.
- It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
If you need a more detailed explanation of the appraisal process, please click here.
Home inspectors do not estimate an opinion of value and do not use the same forms as appraisers.
A third-party home inspector will judge the structure of the property, from the top to the bottom.
The archetypal house inspector's report will contain an evaluation of the condition of the house'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.
What is the difference between an appraisal and a comparative market analysis (CMA)? (Return to top)
Frankly, it's like comparing sugar and saccharin.
The CMA relies on indefinite trends in the market.
Appraisals use similar sales which are valid resources.
The appraisal report will also contain neighborhood and construction costs.
A CMA delivers a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
Who's creating the report is hands down the most significant difference between a CMA and an appraisal.
Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's.
The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties.
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 accept a previously agreed upon fee for work they perform, regardless of their outcome.
The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
- The client and other intended users.
- How the appraisal is supposed to be used.
- The appraisal's purpose.
- Precisely what "value" attribute is being reported and what that value means.
- The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
- Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
- 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.
- What was entailed in the process of completing the assignment.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report
Upon completion of the appraisal, what assurance is there that the final number is legitimate? (Return to top)
In the documentation of an appraisal, each appraiser must make sure of the following:
- The appraisal contained a suitable analysis of the information.
- That grave errors of omission or commission were not committed individually or collectively.
- That appraisal services were not rendered in a careless or negligent fashion.
- That a trustworthy, substantiated appraisal report was communicated.
There are rigorous classroom and practical experience requirements that must be satisfied in order to achieve the status of "licensed appraiser" in Texas.
In addition, appraisers must follow a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
(Return to top)
Licensing and certification takes coursework, tests and experience working under a supervisor.
Once an appraiser is licensed, he/she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.
Who engages the services of appraisers? (Return to top)
Typically, appraisers are called upon by mortgage lenders to estimate the value of real estate involved in a loan transaction.
Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Webb County or other areas? (Return to top)
Gathering data is one of the primary occupations of an appraiser.
Data can be divided into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.
General data is collected from a numerous places.
Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables.
To verify actual sales prices, we use items in the assessor's office and other public documents.
Appraisers often 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 service.
And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.
Why should I hire a licensed appraiser? (Return to top)
An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision.
For those selling a home, you'll want to determine 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 those settling an estate or divorce, an appraisal from Robinson Associates is the best way to ensure assets are divided evenly.
A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that? (Return to top)
PMI stands for Private Mortgage Insurance.
PMI takes care of the lender in case a borrower doesn't pay on the loan and the value of the property is less 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.
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The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in a matter of months. Robinson Associates is in the business of tracking real estate value trends in Laredo and Webb County. Contact us today.
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How do I get ready for the appraiser? (Return to top)
The first step in most appraisals is the property inspection.
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 features.
The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would get in our way while we measure the structure. On the inside, make sure 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 plot plan or survey of the house and land (if readily available).
- Information on any written private agreements, such as a shared driveway with a neighbor.
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
- Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
- Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
What is "Market Value?" (Return to top)
In real estate appraising, Market Value (as opposed to Fair 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."
Does the appraisal belong to the bank or the consumer? (Return to top)
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 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 stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements? (Return to top)
Like all things real estate, this is dependent on a home's location.
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 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, yielding 85%.
On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.
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