Peter M. Cella & Associates has answers to "Frequently Asked Questions"
Define the term "Appraisal"
Define the term "Appraisal" (List of questions)The appraisal process is an estimation that generates an opinion of value. This opinion or estimate is discerned through the use of a formal method that typically utilizes three "common approaches to value". The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves concluding what the improvements would cost minus physical depreciation, adding the land value. Easily the most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which concerns making a comparison to similar homes nearby. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for 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? (List of questions)An appraiser produces a professional, unbiased assessment of market value, in the support of real estate exchanges. Appraisers show their professional conclusions in appraisal reports.
What would cause me to request services from Peter M. Cella & Associates? (List of questions)There are a lot of reasons to purchase an appraisal from Peter M. Cella & Associates with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
What is the difference between an appraisal and a home inspection? (List of questions)Home inspectors do not provide an opinion of value and are not appraisers. The purpose of a home inspection is to investigate the structure of the house from foundation to top. Commonly, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)? (List of questions)Simply put, it's like comparing Shakespeare to reality TV. What the CMA relies upon are ill-defined trends. An appraisal is based on comparable sales that can be verified by records. Area and architectural 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.
The person behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.
What can I expect to see in my appraisal report? (List of questions)The main objective of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
Once the assignment has been completed, how can I have certainty that the value conclusion is valid? (List of questions)In communicating an appraisal report, each appraiser must ensure the following:
Who engages the services of appraisers? (List of questions)Mortgage lenders are an appraiser's most likely client, needing their services to ensure property 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 data used to estimate values in San Mateo County or other areas? (List of questions)Compiling information is one of the primary things an appraiser performs. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.
General data is collected from a numerous 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 use tax records 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 product.
And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other properties in the same market.
What can a full appraisal do for me? (List of questions)If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. 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, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Peter M. Cella & Associates is the best documentation to ensure assets are split up properly. A house 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? (List of questions)PMI is an acronym for Private Mortgage Insurance. This added policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
How do I get ready for the appraiser? (List of questions)The first step in most appraisals is the home 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 we have 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. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.
You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
What is "Market Value?" (List of questions)In real estate appraising, Market Value is commonly defined as:
Once complete, who actually owns the appraisal report? (List of questions)In most real estate transactions, the appraisal is ordered by the lender. 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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.
The exception to this rule is 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 stipulated otherwise, the home owner can use the appraisal for any purpose.
Which home renovations add the most to the price? (List of questions)It really depends on the market. 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
As a rule, the best ROI 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 $30,000 kitchen remodeling project would add approximately $26,400 to the value of the home. Bathrooms are right up there with kitchens, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.