A home purchase is the largest, single investment most people will ever make. The purchase of real property is a complex financial transaction that involves multiple parties beyond the buyer and seller. The Realtor aids in the sales process, the mortgage company provides the financing, the title company ensures clear title and a safe transaction.
But who makes sure the value of the property is in line with the amount being paid? A real estate transaction is too valuable for all the parties to not bring in an unbiased expert to ascertain a fair market value. This is where the appraisal comes in.
An appraisal company gives an unbiased estimate of the value for a parcel of real estate. Most people turn to a licensed, certified, professional appraiser like Mario Mazzamuto to provide them with the most accurate estimate of the true value of their property.
Here are some Frequently Asked Questions (FAQ) we hear at SF Bay Appraisal:
SF Bay Appraisal is based in Contra Costa County, and services the entire Bay Area.
SF Bay Appraisal appraises all types of residential and commercial properties, including single-family homes, multi-family homes, condominiums, horse & specialty properties, and townhomes.
Great question! Here is a detailed explanation of the home appraisal process, and how the value of a property is determined by an unbiased expert appraiser.
So what goes into a real estate appraisal? It all starts with the inspection. An appraisal company’s duty is to inspect the property being appraised to ascertain the true status of that property. He or she must actually see features, such as the number of bedrooms, bathrooms, the location, and so on, to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, the appraiser looks for any obvious features – or defects – that would affect the value of the house.
Once the site has been inspected, an appraiser uses two or three approaches to determining the value of real property: a cost approach, a sales comparison and, in the case of a rental property, an income approach.
The cost approach is the easiest to understand. The appraiser uses information on local building costs, labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for. Why would you pay more for an existing property if you could spend less and build a brand new home instead? While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach.
Instead, appraisers rely on the sales comparison approach to value these types of items. Appraisers get to know the neighborhoods in which they work. They understand the value of certain features to the residents of that area. They know the traffic patterns, the school zones, the busy through-ways; and they use this information to determine which attributes of a property will make a difference in the value. Then, the appraiser researches recent sales in the vicinity and finds properties which are ”comparable” to the subject being appraised. The sales prices of these properties are used as a basis to begin the sales comparison approach.
Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), the appraiser adjusts the comparable properties to more accurately portray the subject property. For example, if the comparable property has a fireplace and the subject does not, the appraiser may deduct the value of a fireplace from the sales price of the comparable home. If the subject property has an extra half-bathroom and the comparable does not, the appraiser might add a certain amount to the comparable property.
In the case of income producing properties – rental houses for example – the appraiser may use a third approach to valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.
Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the subject property. It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. There are always mitigating factors such as seller motivation, urgency or ”bidding wars” that may adjust the final price up or down. But the appraised value is often used as a guideline for lenders who don’t want to loan a buyer more money than the property is actually worth.
The bottom line is: an experienced appraisal company will help you get the most accurate property value, so you can make the most informed real estate decisions.
There are many reasons to get a professional real estate appraisal. Every year, countless people in the United States buy, sell or refinance their own slice of the American Dream. Most, if not all, of these transactions include a simple line item for a home appraisal. It has become an understood and accepted part of a real estate transaction. “Let’s bring in the expert and make sure we’re not spending too much on this property.”
For homeowners, a real estate appraisal is the linchpin to buying or selling their home. It allows the property transactions to occur among the buyer, seller, real estate agent and mortgage lender.
But there are many other times when the services of a certified, licensed, independent real estate professional might come in handy. Some of them include divorce, estate planning, tax assessment appeals, and more.
Unlike a real estate agent, an appraisal company has no vested interest in what amount the house sells for. It’s easy for them to step in and give you the information to help you make your decision. Appraiser fees are based on efforts to complete the report and not a percentage of the sales price. So seeking a professional appraisal can often help homeowners make the best decisions on investing in their homes and setting a fair sales price.
Buying a home is a significant investment. Before you invest in a property, you should obtain a professional appraisal from an appraiser with your interests in mind. Normally an appraisal will need to be performed on behalf of the lender, by an appraiser working closely with sellers, brokers, and agents.
Our appraisers bring critical analysis to help you choose the best options possible. We also offer additional market information that can benefit you during the process of buying a new home. From local property listing data to general market info, our experienced team has helped countless homeowners navigate real estate in the Bay area.
Appraisal reviews help financial institutions determine whether an appraisal or evaluation is appropriate for the transaction, the risk of the transaction, and whether the process by which the collateral valuation is obtained ensures independence and quality.
Some banks supplement routine reviews with post-funding evaluations of appraisal quality for some of their higher-risk or greater-value transactions as a control to assist in detecting valuation problems.
In addition to conforming our work to the forms and guidelines of our review clients, there are four Fannie Mae forms that are generally used for review services, and we can prepare an appraisal review on any of them. They include an appraisal “desk” review, a “field” review, a “short” form and a “narrative” form. Here at San Francisco Bay Appraisal Services, we are experienced in all types of appraisal reviews, review procedures and the responsibilities of review appraisers.
SF Bay Appraisal is FHA Approved. Our company is on the FHA Roster of approved residential appraisers. We are qualified and approved to do appraisals for FHA insured loans. We’re trained and understand the rules and procedures in FHA’s guidance and policy documents. If you’re in need of an appraisal for an FHA loan, please contact us and we’ll be able to help you right away.
An FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development (HUD). The FHA does not loan money to borrowers, rather, it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans. Remember, the FHA is different from the VA appraiser panel in that the lender can choose the appraiser.
FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.
An appraisal does not need to make you nervous. We have put together an article listing the requirements, process, suggestions, and tips to help you prepare for an appraisal. You got this. Click here to read more.
It takes a lot to serve as a real estate appraiser. Licensing and certifications are expected requirements. Additionally, experience, integrity, and reputation are needed to establish a career as a leader in the Bay Area. Mario Mazzamuto is the owner and principal appraiser; he is licensed as a State Certified Real Estate Appraiser (SCREA), and is also FHA, HUD, USDA approved. License number AR035584. Click here to read more about Mario's experience and certifications.