Mid State Appraisal Company (owner: John M. Eckert Jr.) has answers to "Frequently Asked Questions"
Describe an appraisal
Describe what an appraiser does
Why would I require services from Mid State Appraisal Company (owner: John M. Eckert Jr.)?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Once the appraisal is done, how can I have assurance that the value indicated is accurate?
What are the requirements to be a certified appraiser?
Who hires Mid State Appraisal Company (owner: John M. Eckert Jr.)
Where does Mid State Appraisal Company (owner: John M. Eckert Jr.) get the data used to estimate values in Ocean County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
What is "Market Value?"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?
Describe an appraisal (Return to top)
The appraisal process is an estimation that generates an opinion of value.
This opinion or estimate is concluded using a formal process that usually uses three "common approaches to value".
One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value.
Another of the processes is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close proximity which have recently sold.
The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price for a house.
One of the least common approaches in appraising homes is the Income Approach, which is commonly used to determine the market value of a property based on what an investor would pay based on the capital produced by the building.
Describe what an appraiser does (Return to top)
An appraiser produces an objective and well supported determination of market value, in the support of real estate transactions.
Appraisers summarize their investigation in appraisal reports.
Why would I require services from Mid State Appraisal Company (owner: John M. Eckert Jr.)? (Return to top)
There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions.
Other reasons for obtaining an appraisal include:
- If you are applying for a loan.
- To lower your property taxes.
- To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
- To fight improperly assessed property taxes.
- If you need to settle an estate.
- To provide you an edge when purchasing real estate.
- To find an honest property value when listing your home.
- To protect 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.
- If you ever find yourself in a civil case.
If you need a more detailed explanation of the appraisal process, please click here.
Appraisers do not do complete house inspections and are not home inspectors.
The point of a home inspection is to evaluate the structure of the house from bottom to attic.
For the most part, a home inspection report will evaluate the amenities and the requirements of the home: 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)
Honestly, they share nothing in common.
The CMA relies on indefinite market trends.
Appraisals use similar sales which are verifiable resources.
The appraisal report will also include location and building values.
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.
But the largest differentiator is who's behind the report.
Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation.
A certified, state licensed professional who has formed a career on valuing homes in and around Ocean County creates the appraisal.
Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for work they perform, regardless of their outcome.
Every appraisal should demonstrate a supported value opinion and must document the following:
- The client and other intended users.
- The intended use of the appraisal.
- The reason for the appraisal.
- The type of value reported and a definition of the value reported.
- The effective date of the value opinion.
- Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures 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.
- The scope of work considered when completing the job.
For a more in depth view of what goes into an appraisal report click here: Sample Appraisal Report
Once the appraisal is done, how can I have assurance that the value indicated is accurate? (Return to top)
In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
- That the information analysis utilized in the appraisal was proper.
- That major errors of omission or commission were not committed individually or collectively.
- That appraisal services were not executed in a careless or negligent manner.
- That a credible, substantiated appraisal report was conferred.
To become a state licensed appraiser, we must fulfill intense education and experience requirements that train us to formulate an unbiased opinion.
Plus, appraisers must abide by a strict industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
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Licensing and certification requires coursework, tests and experience working under a supervisory appraiser.
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 hires Mid State Appraisal Company (owner: John M. Eckert Jr.) (Return to top)
Mortgage lenders are an appraiser's most likely customer, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default.
Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.
Where does Mid State Appraisal Company (owner: John M. Eckert Jr.) get the data used to estimate values in Ocean County or other areas? (Return to top)
Collecting information is one of the main things an appraiser does.
Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a many places.
To find out about recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service.
To double-check actual sales prices, we look at tax records and other public documents that are usually online nowadays.
Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.
And last but not least, 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? (Return to top)
An appraisal is a worthwhile anytime your home's value 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 commissioning an independent appraisal.
For parties settling an estate or divorce, an appraisal from Mid State Appraisal Company (owner: John M. Eckert Jr.) is the best way to ensure assets are split up fairly.
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 short for for Private Mortgage Insurance.
PMI protects the lender if 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.
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Does your monthly loan payment include a fee for PMI?Call Mid State Appraisal Company (owner: John M. Eckert Jr.) today at (732) 286-2288 or send us an e-mail. Documentation of your home's present value could save you thousands.
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Should I do anything in advance of the appraisal inspection (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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would make it difficult to 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:
- Information on the latest purchase of the property in the last three years.
- List of personal property to be sold with the home.
- Information on "Homeowners Associations" or condominium covenants and fees.
- Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
- Most recent real estate tax bill from Ocean and or legal description of the property.
What is "Market Value?" (Return to top)
In real estate appraising, 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."
Who has rights to the appraisal report? (Return to top)
For mortgage transactions, the lender orders 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 certainly 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 cases, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.
How can I get the most ROI out of home improvements? (Return to top)
This really depends on where the home is.
For example,
installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
As a rule, the best ROI from renovating a home comes in the kitchen.
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, returning 85%.
Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.
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