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Why is the charge so high when you are at the
property for so little time?
Although very important,
inspecting property is only a small portion of the amount of work
that is needed to complete an appraisal. Prior to the appointment
there is much preparation. Inspecting comparable sales is another
part of the appraisal. The end result is a fully researched report
based on historical information, appraiser experience and many long
hours of work. |
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What constitutes a comparable property?
Comparables are selected based on their most similar property
characteristics, proximity to the subject, similar neighborhoods,
condition and quality of the homes. |
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What if I have a "Unique Property"?
Unique properties are
commonly properties which are not "typical" for the area. These
properties usually require better research, explanations and
addressing items as property obsolescence. |
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What is external obsolescence, functional
obsolescence and physical depreciation?
External obsolescence is commonly used where there is a factor
outside of the subject property that could effect the value. A
typical example is the subject is on a busy street with heavy
traffic.Functional
obsolescence is used in both curable and non-curable situations. An
example of curable obsolescence is the property needs a roof, paint
or other major maintenance item. Non-curable functional obsolescence
example is when the cost of a swimming pool exceeds the added market
value or when a property is over built for the neighborhood.
Physical depreciation is usually
based on the actual age and the degree of updating and modernization
and condition of the property. |
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What if I need a roof or other major repair?
For loan purposes and
conventional lending, physical/functional depreciation is usually in
need for cure when it effects the health or safety of the property
owners. Under government financing typical requirements are that
items such as the roof must be warranted through a licensed
contractor. Pest control inspections are most always recommended
when a property is transferred. All appraisals make the assumption
that the property is free of pest infestation and dry rot. |
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Why can't the appraisal inspection be done on
the weekend or at night?
The typical appraisal
office keeps standard hours. Historically night appointments are not
feasible due to lack of lighting in shooting photos. When scheduling
is done in normal business hours more than one property is inspected
during the day. Keeping property inspections in the same area
reduces the cost of the appraisal. If a weekend appraisal is done
the cost will rise accordingly. Some companies do charge a premium
fee for weekend appraisals. |
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What constitutes a health or safety hazard?
A health and safety hazard
is any condition of a home which could pose a threat to the
occupants or neighbors. |
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What if my property looks better than all the
other properties in the neighborhood?
Hopefully the property is not over improved for the neighborhood and
if not the appraiser should recognize the improvements that you have
made. |
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Why can’t I get the appraised value at the
same as the inspection?
Appraisers normally view the
subject property first so selection of the comparables are made on
the amenities of the subject property. Comparable properties must be
driven and observed and in accordance with state and federal
regulations certain criteria met. Besides inspecting the property,
considerable time is needed for the written report which can vary
from two to twenty hours. |
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How is square footage of a home calculated?
Square footage is normally
calculated based on exterior measurements for condition space only.
The exterior garages, unfinished basements, unfinished attics are
not included. Although the practice does vary, most appraisers
measure to the half foot. |
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What if we have additions to our property
without building permits?
Although it varies to each lender, the addition must meet building
codes and be consistent in quality and design with the remainder of
the home and be functional in design to be included in the appraisal
without a building permit. |
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Why does FHA want properties appraised as
repaired?
FHA insures properties and
prior to issuing a commitment of inspection FHA is concerned that
the property be in a marketable condition. |
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Why do appraisers prefer comparables be sales
within the last six months period?
Market conditions can change in a short period of time. Using
current sales indicates current trend in any given area. Although
current sales are most desirable, sales up to one year can be used
if better sales are not located. |
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Why are two to four units appraisals so
expensive?
Good appraisal practice requires that the appraiser not only use
current market sales but that current market listings are utilized.
The rental structures are reviewed to current market standards and a
gross rental multiplier is used in the property comparison. This
report typically takes at least twice as long as the single family
property. |
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What is meant by effective age
adjustment?
Effective age is estimated based upon the current actual age,
improvements or upgrades, style, design, modernization and current
condition of the home in comparison to today’s standards of housing. |
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When I have a rental property, why do I need
rental and operating income statements?
The lender requires that your reported rents are verified as to the
actual market rents within your area. Operating Income Statements
are used to verify your costs, estimate rental costs, depreciation
schedules, vacancy factors and cost of management. |
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How are quality adjustments made?
Quality adjustments are made based on the overall quality of
materials, the functional utility of the structure design and the
overall appeal of the structure. Adjustments for quality are based
on exterior observation, agent comments, and inspection of
comparable properties. |
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Why do adjustments have to be within a
range of ten to fifteen percent?
If large adjustments are used this may indicate non conforming
characteristics. Large adjustments are harder to substantiate by
market data. |
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Who is Fannie Mae and what are their
guidelines?
Federal National Mortgage Association (Fannie Mae) is a privately
owned agency which deals directly and exclusively in the
conventional loan market. FNMA will purchase conventional loans from
VA/FHA approved mortgages or lenders when the application includes a
professional, acceptable appraisal. Mortgage companies which have
been previously approved to process and make loans for VA or FHA
applicants are eligible to deal with FNMA. There are many other
buyers of mortgages and most conform to the same standard. |
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