What home buyer appraisal services do you offer?
Home Buyer Appraisal Services
Most homebuyers believe they are getting a good deal if they make an offer lower than the listed price. But what many fail to consider is how far above market value the property has been listed for.
For example, is it listed 15% higher than market value? Or maybe 25%? A negotiated price of less than the listed price, on a property that was listed 25% above its value is not a bargain.
And in most states, real estate agents cannot tell home buyers that an offered price is higher than the value of the home. They must submit the offer as is to the seller.
You can quickly see why an appraisal can be very important when considering making an offer on real estate. In fact, being armed with a reliable estimate of value can be a very desirable position to hold when purchase a property.
At Humes Realty and Appraisal Service, LLC, we specialize in providing high quality appraisals that will ensure that you don’t overpay for the home of your dreams.
Don’t Need an Appraisal…
We can still provide you with valuable local property and sales data information through our homebuyer consulting service. We will give you the information you need to make an informed buying decision.
We understand that deciding to buy a home can be stressful and complex. Let us help ease your mind by giving you the information you need to feel sure about your decision.
Unmatched Customer Service
At Humes Realty and Appraisal Service, LLC, in addition to delivering high-quality appraisals, we also deliver industry-leading customer service. We will answer your questions, provide relevant recommendations, and work with you to resolve any issues that may arise in the quickest, most convenient manner possible.
Plus, our convenient electronic ordering and delivery system allows us to deliver much quicker turnaround times than other appraisal services and helps us eliminate the costly miscommunications that can be common with other services.
What is Private Mortgage Insurance (PMI)?
About Private Mortgage Insurance
Private mortgage insurance (PMI) is a type of insurance that helps protect mortgage companies against losses due to foreclosure. This protection is provided by private mortgage insurance companies and allows mortgage companies to accept lower down payments than would normally be allowed.
PMI also enables mortgage companies to grant loans that would otherwise be considered too risky to be purchased by third party investors like the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC).
The ability to sell loans to these investors is critical to maintaining mortgage market liquidity, which in turn allows mortgage companies to continue originating new loans.
Americans Earning Less, Saving Less
Why is PMI needed? Relative to the growth in home prices over the last quarter century, Americans are earning less and, as a result, saving less. This means many families today are being forced to wait longer than their parents and grandparents before buying their first home.
One way to reduce this wait is through PMI – and many families are taking advantage of it. Recent government statistics show that one of every two homebuyers obtained a low down payment loan; and many of them used private mortgage insurance (PMI) to realize their homeownership dream.
The Importance of Recognizing When to Get Rid of PMI
Most lenders require Private Mortgage Insurance (PMI) if the borrower has less than 20% equity in a home. One of the more difficult things for most homeowners is determining when their home equity has risen above the 20% point. Failure to recognize this significant event will leave you paying a higher mortgage payment than you need to be paying.
In fact, with appreciation in your home value, you might already have more than 20% equity and not know it! The best way to determine the value of your home is through an appraisal. While the Homeowner Protection Act of 1998 requires that lenders drop PMI payments when the loan to value ratio conditions have been met, most require an appraisal to support the homeowner’s assertions of the value increase.
Getting an appraisal now and dropping your PMI payments will significantly reduce your monthly mortgage payments – and save you thousands of dollars.
I’m in the market for a new home. What should I look for in a home?
Home Buyer’s Checklist
This checklist identifies the important factors you should consider when selecting a home.
In addition to your house being affordable, you will also want to be sure that it and the neighborhood it is located in meet the needs of your family.
For instance, if you have children, you may want to know if there is a quality school nearby or if there are other children in the neighborhood. Or if you work, the distance and travel time to and from your place of employment or the availability of public transportation may be of concern to you.
You may already know the type and size of home you would like to purchase, but there are many other features that you will want to consider before deciding to buy a particular house. Take this checklist along when you go shopping for your house. It will help you evaluate the neighborhoods and the availability and condition of various features of up to three homes in a side-by-side comparison.
Home #1 Home #2 Home #3
Real estate taxes
Near public transportation
Streets well maintained
Neighbors’ yards maintained
All utilities installed
Neighborhood covenants or restrictions
Near train track/airport
Area zoned residential
Proposed special assessments
Age of the house
Number of stories
Wood and brick frame
Overall exterior condition
Number of bathrooms
Number of closets
Number of bedrooms
Hot water heat
Central air conditioning
Energy conservation features
Age of heating system
Age of hot water system
Capacity of hot water heater
Age of electrical wiring
Estimated water bill
Estimated heating bill
Estimated electric bill
Separate dining room
Window coverings X # of rooms
Carpeting X # of rooms
Kitchen eating area
Connected to sewer system
Security (dead bolt locks, smoke detectors)
Building code compliance (remodels & additions)
Ability to expand or enlarge house
What misconceptions do people have about appraisals?
Common Home Appraisal Misconceptions
Though most of us will undergo a home appraisal at some point in our lives, it is still not something that we experience on a regular basis. As a result, many people are unfamiliar with the complete home appraisal process and may hold several misconceptions about it.
Following are the top seven misconceptions that most people have about the home appraisal process as well as the actual truth for each misconception.
Misconception: Appraisers use a specific formula (for example, price per square foot) to figure out exactly how much a home is worth.
Truth: Appraisers actually weigh the location of the home, its proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home itself, and recent sale prices of comparable properties, among numerous other factors.
Misconception: An appraisal’s primary purpose is to ensure that a buyer does not pay too much for a house.
Truth: While providing valuable information to both buyer and the seller, an appraisal’s primary purpose is usually to protect the lender, who does not want to be stuck owning an overpriced property.
Misconception: There is nothing I can do to improve my home’s valuation.
Truth: The overall maintenance of a home is of primary interest to appraisers. They will look to see: if the walls, flooring, and floor coverings are in good shape; if the built-in appliances are in good working order; and if the mechanical systems (plumbing, electrical, heating and cooling) are functioning properly. So keeping a well-maintained home is of vital importance to receiving a good valuation. In addition, while good housekeeping is not a requirement, having a clean, orderly home can also indicate to an appraiser that a home has been well taken care of.
Misconception: Anyone can be an appraiser.
Truth: Federal law requires states to establish minimum standards and licensing practices for real estate appraisers.
Misconception: Appraisers have no obligation to reveal home defects to buyers.
Truth: If the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose the potential problems to the buyer. No such obligation exists for non-FHA mortgages.
Misconception: An appraisal is identical to a home inspection.
Truth: An appraisal is not a substitute for a professional home inspection. The appraiser formulates an opinion of the property’s value for the lender, while the inspector educates the buyer about the condition of the home and its major components.
Misconception: A home’s assessed value should equal its market value.
Truth: Interior remodeling that an assessor is unaware of and nearby properties that have not been assessed for an extended period of time could both greatly impact the assessed value of the home.
I need help understanding some appraisal terms…
Common Home Appraisal-related Terms
The determination of property value based on recent sales information of similar properties.
Someone who is professionally licensed to determine the value of a home.
Determining a property’s value for the purpose of taxation.
Increases in property value due to fluctuations in the market, inflation, etc.
Valuable items, encumbered or not, owned by a person, corporation or entity.
An individual in the business of assisting in arranging funding or negotiating contracts for a client but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.
Certificate of Reasonable Value (CRV) –
An appraisal that has been performed on a property that is being paid for with a VA loan. After the property has been appraised, the Veterans Administration issues a CRV.
A legal document which affects the transfer of ownership of real estate from the seller to the buyer.
In real estate and mortgage terms, the decline in the property value.
The difference between the current market value of a property and the principal balance of all outstanding loans.
Home Inspection –
A thorough assessment by professional regarding the structural and mechanical condition of a property.
The bank, mortgage company or mortgage broker offering the loan. Many institutions only “originate” loans and then resell the obligation to third parties.
The principal, or amount of total borrowed money, that is repaid with interest.
Loan-to-Value Ratio –
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage. An LTV ratio of 90 means that a borrower is borrowing 90% of the value of the property and paying 10% as a down payment. For purchases, the value of the property is assumed to be the purchase price, for refinances the value is determined by an appraiser.
A legal document that pledges property to a creditor for the repayment of the loan and is the term used to describe the loan itself. Some states use the First Trust Deeds to refer to the mortgage loans.
The lender in a mortgage agreement
Mortgage Banker –
A financial intermediary that originates or funds loans, collects payments, inspects the property and forecloses if necessary.
Mortgage Insurance –
Insurance that covers the lender against losses incurred as a result of a default on a home loan. This is usually required on all loans that have a loan value higher than 80%. Mortgages that have an 80% LTV that do not require mortgage insurance have higher interest rates. The lenders then pay the mortgage insurance themselves. In addition, FHA loans and some first time homebuyer programs require motgage insurance regardless of the loan’s value.
Owner’s Title Policy –
A policy protecting the buyer for the amount of the purchase price in the event of a future title dispute.
Private Mortgage Insurance (PMI) –
Paid by a borrower to protect the lender in case of default. PMI is typically charged to the borrower when the Loan – to – Value Ratio is greater than 80%.
Purchase Agreement –
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
A real estate agent, broker or associate that holds an active membership in a local real estate board that is affiliated with the National Association of Realtors.
The process of paying off one loan with the proceeds of a new loan, using the same property as security.
Second Mortgage –
A mortgage that has a lien position subordinate to the first mortgage.
A drawing or map that shows the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments and other physical features.
The right of a community, under its police power, to dictate use of property with its boundaries.
How do I prepare for an appraisal?
How to Prepare for an Appraisal
There are several factors that can affect the appraised value of your home, including whether or not:
- It is well-maintained inside and out.
- It is located in a good school district.
- Additions fit well into the existing house.
- Properties throughout the neighborhood are well-maintained.
- It is the largest house on the block (or the most improved.)
- The style of the house conforms with those in the neighborhood.
- Zoning changes are expected.
For those items listed above that you can improve on, such as maintaining your house (which includes repairing leaky faucets, painting over spots on the wall, etc.), it is well worth the effort to do so prior to scheduling the appraisal.
Once you decide to schedule the appraisal, you should try to gather all of the following documents to present to your appraiser upon his or her arrival:
- A plot plan or survey of the house and land.
- Your most recent tax bill or a legal description of the property.
- Copies of any recent home inspection reports, or other recent reports, such as for termites.
- Your abstract of title.
- Homeowners Association information and fees.
- Property purchase information for the last three years.
- All written property agreements that you may have – such as shared driveway maintenance agreement, etc.
- A list of personal property that is to be included in the sale of the home.
- A list of major home improvements (including date and permit confirmation, if necessary).
- A copy of the current listing agreement.
- A copy of the broker’s data sheet.
- A copy of the Purchase Agreement if a sale is pending.
Also prior to the scheduled appraisal, you should make sure that all areas of your home are accessible and that your home is as clean and orderly as possible to make a good impression on the appraiser.
Once your appraiser has arrived, you do not need to accompany him or her along on the entire site inspection, but you should be available to answer questions about your property and be willing to point out any home improvements.
Help me understand my appraisal…
Understanding an Appraisal Report
An appraisal is an estimate of the value of a specific property. The appraisal report is a detailed description of the process the appraiser used to reach the estimated value he or she placed on the property.
Appraisals can be delivered as an oral report, a letter report, a form or a narrative report. Narrative reports are the most complete appraisal format. A typical narrative report will contain the following sections and information:
- An introduction – which is used to establish the appraiser’s purpose and to state any limitations which may exist.
- A factual descriptions section – which may include: photographic identification of the property; area, city, neighborhood, and location data; zoning and taxes data; site data; description of improvements; and history.
- A data analysis section that includes the appraiser’s opinions – items in the section may include: market analysis; highest and best use of the land, as though vacant; highest and best use of the property, as improved; land value; sales comparison approach; income capitalization approach; cost approach; and reconciliation of the value indications to a final value estimate.
- An addendum – that contains a detailed legal description; detailed statistical data; leases or lease summaries; and the appraiser’s qualifications.
Reading an Appraisal Report
Each part of an appraisal report should have a distinct purpose and should add to your understanding of the basis for the value determination.
Sections should build on one another and point to the same conclusion. Information used to make adjustments and reconciliation in the last portions of the report should be drawn from earlier sections.
At Humes Realty and Appraisal Service, LLC, we specialize in delivering high-quality appraisals that are easy to understand. We will answer your questions, provide relevant recommendations, and work with you to resolve any issues that may arise in the quickest, most convenient manner possible.