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Decoding the Appraisal Process

Buying real estate is the most important financial decision most could ever make. It doesn't matter if it's a primary residence, an additional vacation property or one of many rentals, purchasing real property is a detailed transaction that requires multiple people working in concert to see it through.

To learn more about appraising, click here to see a short video or call us today to talk about your specific property.


Most of the people participating are quite familiar. The real estate agent is the most recognizable face in the exchange. Then, the bank provides the financial capital required to finance the transaction. Ensuring all areas of the sale are completed and that a clear title transfers to the buyer from the seller is the title company.

So what party makes sure the value of the property is in line with the purchase price?   This is where you meet the appraiser.   We provide an unbiased estimate of what a buyer might expect to pay - or a seller receive - for a parcel of real estate, where both buyer and seller are informed parties. A professional Michigan licensed appraiser from Martinus Appraisal, will ensure you as an interested party are informed.

The inspection is where an appraisal begins

To determine the true status of the property, it's our duty to first conduct a thorough inspection. We must see features first hand, such as the number of bedrooms and bathrooms, the location, living areas, etc., to ensure they indeed are present and are in the shape a reasonable buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the square footage is proper and illustrating the layout of the property. Most importantly, the appraiser looks for any obvious features - or defects - that would have an impact on the value of the property.

Following the inspection, an appraiser employs two or three approaches when determining the value of the property: a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.

Replacement Cost

This is where we gather information on local building costs, the cost of labor and other factors to derive how much it would cost to replace the property being appraised. This estimate usually sets the maximum on what a property would sell for. It's also the least used predictor of value.

Paired Sales Analysis

Appraisers become very familiar with the neighborhoods in which they appraise. We thoroughly understand the value of specific features to the homeowners of that area. Then, the appraiser looks up recent sales in the neighborhood and finds properties which are 'comparable' to the real estate being appraised. Using knowledge of the value of certain items such as remodeled rooms, types of flooring, energy efficient items, patios and porches, or additional storage space, we adjust the comparable properties so that they more accurately portray the features of subject.

  • If, for example, the comparable property has a fireplace and the subject doesn't, the appraiser may subtract the value of a fireplace from the sales price of the comparable.
  • However, 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.
After all differences have been accounted for, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for. The sales comparison approach to value is commonly awarded the most consideration when an appraisal is for a real estate exchange.

Valuation Using the Income Approach

A third way of valuing real estate is sometimes used when an area has a measurable number of rental properties. In this situation, the amount of revenue the real estate yields is taken into consideration along with other rents in the area for comparable properties to determine the current value.

Reconciliation

Analyzing the data from all approaches, the appraiser is then ready to document an estimated market value for the property at hand. It is important to note that while the appraised value is probably the best indication of what a house would sell for in an open market, it probably will 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. Regardless, the appraised value is often employed as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace. It all comes down to this: An appraiser from Martinus Appraisal will guarantee you get the most accurate property value, so you can make wise real estate decisions.

 

Getting an appraisal from Martinus Appraisal

Thousands of people in Michigan purchase, sell or refinance their home every year. Most of these transactions have a simple line item for an appraisal. Almost all lenders still call for a local expert because the stakes are incredibly high, even though there are a multiplying number of automated home valuation systems that might seem more cost-effective than an appraisal. You might think that securing a mortgage is the only reason to acquire an appraisal, but there are other situations when the services of a licensed, independent real estate professional might be beneficial.

If you're planning on any transaction where the value of your house is a factor, contact Martinus Appraisal. Just click here.

Appeal your tax assessment in Saginaw, Bay or Midland Counties

It's possible you're paying too much in property taxes if you live in an area where property values have depreciated. Property taxes are determined by a past assessment of your home, so if values are less than what they used to be in your area, you can appeal your assessment and save money. An appraisal from Martinus Appraisal, is your best evidence when building your case. We're qualified to assist you in disputing your tax assessment.

How can you do away with PMI to lower your mortgage payment?

Private Mortgage Insurance, or PMI, is an extra insurance plan that nearly all lenders ask buyers to buy when the amount being loaned to the home owner is more than 80% of the actual value of the real estate. Seeing that added payment is usually folded into the monthly mortgage payment, it is often forgotten. PMI isn't necessary when the remaining balance of the loan - whether through market appreciation or principal pay down - decreases below the 80% mark, making this very unfavorable. In fact, the United States Congress passed a law in 1998 (the Homeowners Protection Act of 1998) requiring lenders to dismiss the PMI installments when the loan-to-value ratio conditions have been met.

If you'd like to eliminate PMI, Martinus Appraisal, will provide you with a statement regarding the value of your home. The cost of the appraisal can usually be offset in just a few months because you'll no longer be paying the PMI.

Settling a divorce with less stress

A divorce is a very daunting ordeal for the parties involved, and it is often further complicated by the burdensome decision of who gets the property. Regardless of the situation, it's a good idea to get an appraisal from Martinus Appraisal, so both parties are completely aware of the true market value of their house.

If the parties wish to sell the home, they'll have a better idea of what price to set. And on the flip side, if a "buyout" is the chosen option, both parties will feel like they've received a fair evaluation.

Settling an estate with peace of mind

The death of a loved one is a hard time in life, and settling an estate from a death, or probate, often entails an appraisal to establish Market Value for the real estate involved. We ensure the fullest degree of discretion, as we're bound with confidentiality by the ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP).

Unlike wealthy individuals, most Americans do not have dedicated estate planners or executors to handle these issues. A home or other property often makes up an uneven share of the total estate value, so knowing the true value of the real estate at hand is of significant importance to ensuring disputing parties walk away knowing they've gotten an honest deal.

Relocating to or from Saginaw, Bay or Midland Counties

We are familiar with the stress involved with an employee relocation. That being said, we take great care in setting up a convenient appointment time for the appraisal inspection. We encourage relocating employees to provide input on the positive features of their property, along with information about any new sales or listings in their area that they want considered during our intensive process.

Let Martinus Appraisal assist you in selling your home quickly at the right price

A professional appraisal will help you make a more informed decision regarding your selling price, whether you choose to sell your home on your own or use the assistance of a real estate agent. Separate from a real estate agent, an appraiser has no vested interest in what amount the house sells for. Our fees are based on our efforts to finish the appraisal report and and aren't related to the sales price.

We examine the difference in value things like an extra bathroom or a kitchen remodel can make on a daily basis. Seeking a professional appraisal is a reliable way to decide what improvements will add value and what an applicable sales price is for your home - so you don't come up short or have your house on the market an unnecessarily long time - because we're experts in knowing how long homes stay on the market.