Bowers Associates Incorporated has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Go to list of questions) The appraisal process is an evaluation that generates an opinion of value. The real estate appraiser must use a few "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves concluding what the improvements would cost minus physical deterioration, plus the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns making a comparison to comparable homes nearby. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a house. The Income Approach is generally used for finding the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.
What does an appraiser do?(Go to list of questions) An appraiser generates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers reveal the details of their analysis in appraisal reports.
What are the reasons a person would require services from Bowers Associates Incorporated?(Go to list of questions) There are many reasons to order an appraisal from Bowers Associates Incorporated with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
What is the difference between an appraisal and a home inspection? (Go to list of questions)Appraisers do not do provide residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and mechanical systems of a house, from the top to the foundation. Generally, a home inspection report will evaluate the amenities and the necessities of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
What is the difference between an appraisal and a comparative market analysis (CMA)?(Go to list of questions) Frankly, they share nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use similar sales which are verifiable resources. Area and architectural prices are also a priority in an appraisal. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's behind the report is frankly 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. A certified, Delaware licensed professional who bases their livelihood on valuing homes in and around New Castle County creates the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.
What's in an appraisal report? (Go to list of questions)The main objective of an appraisal report is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
Once the assignment is done, how can I have a guarantee that the final number is veritable?(Go to list of questions) In communicating an appraisal report, each appraiser must ensure the following:
Who hires Bowers Associates Incorporated(Go to list of questions) Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for divorce and estate settlements.
Where does an appraiser get the information used to estimate values in New Castle County or other areas?(Go to list of questions) One of the main tasks an appraiser engages in is to assimilate data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.
General data is received from a numerous sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.
And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.
What can a full appraisal do for me?(Go to list of questions) Any time 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 a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Bowers Associates Incorporated is the best documentation 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 wise financial decisions.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Go to list of questions) PMI stands for Private Mortgage Insurance. This additional plan takes care of the lender if a borrower doesn't pay on the loan and the market price of the house is less than the balance of the loan. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.
How do I get ready for the appraiser?(Go to list of questions) The first step in most appraisals is the property inspection. 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 . Trim any landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can get to items like furnaces and water heaters.
You can make our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:
Define "Market Value"(Go to list of questions) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who has rights to the appraisal report?(Go to list of questions) 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 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 situations, the appraiser may define 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.
Are some home improvements more worthwhile than others?(Go to list of questions) Like all things real estate, this is dependent on a home's location. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
As a rule, the most value returned 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, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.