Frequently Asked Questions
What is an Appraisal?
An appraisal is a process leading to an opinion of value. This opinion or estimate is generally arrived at through consideration of three different approaches to value – the Sales Comparison Approach, the Cost Approach, and the Income Approach.
The Sales Comparison or Market Approach is normally the most accurate and best indicator of value for a residential property. Using this method, the appraiser analyzes sales of comparable homes from the subject’s market and develops an opinion of the subject property’s current market value.
The Cost Approach – which is what it would cost to replace the improvements, less physical deterioration, and other factors, plus the land value.
The third approach is the Income Approach, which is most important in appraising income producing properties – it involves estimating what an investor would pay based on the income produced by the property.
What is the difference between a home inspection and an appraisal?
A home inspector evaluates the physical condition of a building: the structure, construction and mechanical systems, identifies items that should be repaired or replaced, and estimates the remaining useful life of the major systems (such as electrical, plumbing, heating, air conditioning), equipment, structure and finishes. An inspector does not estimate the market value of a home.
An appraisal report is a document that provides an estimate of a property’s market value. Lenders require appraisals on properties prior to loan approval to ensure that the mortgage loan amount is not more than the value of the property. In most cases, appraisals done are for the benefit of lenders, and home inspections are for buyers.
Why Get an appraisal?
There are many reasons to get an appraisal. Every year, countless people in the United States buy, sell or refinance real estate. Most of these transactions involve mortgage lenders who require appraisals as verification of the value of the property in question. However, there are many other reasons people order appraisals. If you need to consolidate bills, have a college tuition to pay, or just want to tap into the equity of your home, you will need a new loan. This usually requires a new appraisal of the property.
How much does an appraisal cost?
How do I order an appraisal?
(Link to MWF Wholesale Bulletin 17W-079)
Are Smoke Detectors required?
Smoke Detectors- California Building Code R314.3 requires smoke detectors in all sleeping rooms/bedrooms, outside each separate sleeping area and in the immediate vicinity of the bedrooms, and on each story of the dwelling including basements and habitable attics but not including uninhabitable attics or crawl spaces.
**Please note: These requirements may vary per State.
When is the reinspection ordered?
Typically, the 1004D / Reinspection Report is not ordered until all repairs have been completed. However, many times if an agent is involved, they might contact the appraiser directly to schedule the reinspection. Please remind the agent to verify that all repairs have been completed prior to contacting the appraiser.
Carbon Monoxide Detectors required?
CO detectors (at minimum, 1 per level, in vicinity of sleeping areas)
What are the requirements for Hot Water Heaters?
Hot Water Heaters – Must have double earthquake straps. If it is an FHA appraisal, the water heater must have a downward facing pipe and pressure relief valve.
In warmer climate states, must a home have heating?
Must have a functional source.