REID E. CHOATE & ASSOCIATES, LLC has answers to "Frequently Asked Questions"
REID E. CHOATE & ASSOCIATES, LLC is always eager to elaborate on any inquiries you might have about appraisals in Pahoa and Hawaii County.
Contact us today to learn how we can help you with your specific valuation problems.
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The procedure of writing an appraisal report deals with an inspection which leads to an opinion of value.
The real estate appraiser must use a several "approaches," typically three, to come to the estimation of market value.
One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, less the depreciation and physical deterioration, adding the land value.
The most common approach in finding the value of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable houses nearby.
Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home.
The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.
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An appraiser produces a fair and credible determination of market value, to be used in making real estate transactions.
Appraisers present their expert conclusions in appraisal reports.
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There are a lot of reasons to order an appraisal from REID E. CHOATE & ASSOCIATES, LLC with the usual reason being real estate and mortgage transactions.
Some other reasons for obtaining an appraisal report include:
To obtain a loan.
If you would like to reduce your property tax burden.
To show a homeowner has 30% equity and remove insurance.
To fight improperly assessed property taxes.
To deal with an estate.
To offer you an edge when purchasing a home.
To figure out an honest property value when selling your home.
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.
If you ever find yourself in a civil case.
For a more extensive explanation of the appraisal process click here.
Home inspectors do not produce an opinion of value and do not use the same forms as appraisers.
A third-party home inspector will evaluate the structure of the home, from the roof to the foundation.
The usual house inspector's report will contain an evaluation of the condition of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.
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Simply, they share nothing in common.
The CMA relies on vague local market trends.
An appraisal is based on comparable sales that can be proven by public record.
Area and architectural costs are also important in an appraisal.
The CMA will provide a non-specific figure.
Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
Who's creating the report is actually the most significant difference between a CMA and an appraisal.
A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts.
The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties.
Moreover, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
Each appraisal should demonstrate a believable value opinion and should clearly state the following:
The client and other intended users.
The intended use of the report.
The reason for the appraisal.
The type of value contained 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 attributes, the real property interest in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered to complete the appraisal.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report
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In the documentation of an appraisal, each appraiser must make sure of the following:
That the information analysis contained in the appraisal was appropriate.
Whether individually or collectively, there were no substantial errors contained in the appraisal, nor any relevant details left out.
That appraisal services were not rendered in a careless or negligent fashion.
The final appraisal report was clear, sound and defensible.
To become a state licensed appraiser, there are intense education requirements as well as real world experience that must be attained - all with the end goal of being able to provide unbiased value opinions.
Likewise, appraisers must stick to a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
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Mortgage lenders are an appraiser's typical client, using their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default.
Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
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Collecting information is one of the primary roles 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 documented by the appraiser while on site.
General data is collected from a number of places.
Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables.
Tax records and other courthouse documents verify actual sales prices in a market.
Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.
And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.
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An appraisal is a worthwhile whenever the value of your home is pertinent to some financial decision.
For those selling a home, you'll want to determine a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that.
When buying, you can avoid overpaying by getting an independent appraisal.
For parties settling an estate or divorce, an appraisal from REID E. CHOATE & ASSOCIATES, LLC is the best documentation to ensure assets are split up properly.
Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
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PMI is short for for Private Mortgage Insurance.
This additional plan takes care of the lender in case a borrower defaults on the loan and the market price of the home is less than what the borrower still owes on the loan.
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.
Did you secure your mortgage with less than 20% down? Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238. You may be able to cancel your Private Mortgage Insurance payment.
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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 status 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 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 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:
A survey or plot map of the property and building (if readily available).
Written property agreements, such as a maintenance easement for a shared driveway.
Title policy that describes encroachments or easements.
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).
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
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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."
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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 hires an appraiser directly.
In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can do whatever they want with the appraisal.
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This really depends on where the home is.
For example,
while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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 were second, returning 85%.
On the contrary, work that may not increase your value would be painting just for the sake of redecorating.
REID E. CHOATE & ASSOCIATES, LLC PO Box 388 Pahoa, HI 96778-0388
