REID E. CHOATE & ASSOCIATES, LLC has answers to "Frequently Asked Questions"
REID E. CHOATE & ASSOCIATES, LLC is always more than happy to talk to you about any questions you might have about appraisals in Pahoa and Hawaii County.
Contact REID E. CHOATE & ASSOCIATES, LLC today to talk about how we can help solve your specific valuation problems.
The appraisal process is an evaluation that leads to an opinion of value.
This opinion or estimate is figured through the use of a formal method that commonly utilizes the three main "common approaches to value".
One of the methods in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the house, minus depreciation and physical deterioration, adding the land value.
Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which involves making a comparison to similar houses close by.
Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house.
The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.
There are a lot of reasons to purchase an appraisal from REID E. CHOATE & ASSOCIATES, LLC with the usual reason being real estate and mortgage transactions.
Some other reasons for obtaining an report include:
To get a loan.
To reduce your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To fight high property taxes.
To handle an estate.
To give you an edge when purchasing a home.
To find an honest property value when selling your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every house.
If you are ever involved in a lawsuit.
If you need more information regarding the appraisal process, please click here.
Appraisers do not do perform house inspections and are not home inspectors.
A third-party home inspector will judge the structure of the home, from the top to the bottom.
Generally, a home inspection report will evaluate the amenities and the requirements of the house: 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, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.
Frankly, it's like comparing Shakespeare to reality TV.
What the CMA relies upon are vague trends.
An appraisal relies on comparable sales that can be proven by records.
Location and building prices are also important in an appraisal.
The CMA will provide a non-specific figure.
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
But the biggest difference is the person behind the report.
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.
Moreover, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.
The main objective 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, you'll usually see the following:
Who engaged the appraiser and other intended users.
The intended use of the report.
The appraisal's purpose.
The type of value reported and a definition of that value.
The effective date of the value opinion.(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 factors, 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 other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
What was involved in the activity of completing the appraisal.
In the documentation of an appraisal, each appraiser must make sure of the following:
The appraisal contained a suitable analysis of the information.
Whether individually or collectively, there were no major errors contained in the appraisal, nor any relevant details left out.
That appraisal services were delivered in a careful and conscientious manner.
That a credible, substantiated appraisal report was conferred.
There are intense classroom and real world experience requirements that must be fulfilled in order to get an appraisal license in Hawaii.
Plus, appraisers must follow a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
Most of the time, appraisers are hired by lenders to estimate the value of property involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan.
Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
One of the most important things an appraiser does is to collect property data.
Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.
General data is received from a variety of places.
To find out about recent sales 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.
Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
If you're involved in some sort of financial decision and the value of your home matters, you'll want a full appraisal.
If you're selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market.
If you're buying, it makes sure you don't overpay.
For parties settling an estate or divorce, an appraisal from REID E. CHOATE & ASSOCIATES, LLC is the best way to ensure assets are divided evenly.
Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
PMI is an acronym for Private Mortgage Insurance.
This additional plan guards the lender if a borrower doesn't pay on the loan and the value of the house is less than the loan balance.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Does your monthly loan payment have a lineitem for PMI?Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238 or send us an e-mail. Documentation of your home's current value could save you thousands.
We start with an inspection of the home.
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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move 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.
To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:
Any information on the purchase of the property for the last three years.
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A list of "suggested" improvements if the property is to be appraised "as complete".
"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."
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 bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage.
In these scenarios, 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 do whatever they want with the appraisal.
A home's location - what city it is in and even what part of that city - is key to this popular question.
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.
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, yielding 85%.
On the contrary, something 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