Susan Druschel & Associates, LLC has answers to "Frequently Asked Questions"
What is an appraisal?
What is an appraisal?(Back to top) The appraisal process is an estimation that produces an opinion of value. This opinion or estimate is found through a formal method that usually uses the three main "common approaches to value". One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the house, minus age and physical dilapidation, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns discovering a comparison to other similar properties within a close proximity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a house. 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 produced by the property.
What does an appraiser do?(Back to top) An appraiser produces a professional, unbiased opinion of market value, in the support of real property transactions. Appraisers present their expert analysis in appraisal reports.
Why would someone need your services?(Back to top) There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
What is the difference between an appraisal and a home inspection? (Back to top)Home inspectors do not produce an opinion of value and are not appraisers. An inspection is a third-party investigation of the available structure and electrical and mechanical systems of a property, from the top to the foundation. Generally, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity 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)?(Back to top) Simply put, it's like comparing broadband and dial-up. The CMA relies on vague trends in the market. An appraisal utilizes comparable sales that can be proven by records. The appraisal report will also contain neighborhood and building costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is who's doing the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, South Carolina licensed professional who has formed their livelihood on valuing properties in and around Charleston County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their value conclusion.
What are the contents of an appraisal report? (Back to top)Each report must indicate a credible estimate of value and must document the following:
After completing the report, how can I have certainty that the value conclusion is valid?(Back to top) In communicating an appraisal report, each appraiser must ensure the following:
Who are an appraiser's customers?(Back to top) Commonly, appraisers are employed by mortgage lenders to estimate the value of real estate involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.
Where does an appraiser get the data used to estimate values in Charleston County or other areas?(Back to top) One of the main activities of an appraiser is to gather property data. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is received from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.
And last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.
Why do I need a professional appraisal?(Back to top) An appraisal is a valuable tool anytime the value of your home is relevant to some financial decision. When selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Susan Druschel & Associates, LLC is the best way to ensure assets are divided properly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that?(Back to top) PMI is the common abbreviation for for Private Mortgage Insurance. It guards the lender in case a borrower defaults on the loan and the market price of the house is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Should I do anything in advance of the appraisal appointment(Back 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 . Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
What is "Market Value?"(Back to top) In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:
Who actually owns the appraisal report?(Back to top) In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled 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 cases, the appraiser may state 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.
I want to get more for my house. Where should I spend money renovating?(Back to top) A home's location - what city it is in and even what part of that city - is key to this popular question. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes
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, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.