APPRAISALS "R" US has answers to "Frequently Asked Questions"


	APPRAISALS "R" US is always eager to answer any questions you might have about appraisals in Orange County. Contact APPRAISALS "R" US today to see how we can help you with your specific valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would a person request your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the appraisal has been delivered, how can I have assurance that the final number is valid?
How hard is it to become certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Orange County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

What is an appraisal? (Go to list of questions)

An appraisal report is an investigation allowing the appraiser to come to an opinion of value. This opinion or estimate is figured by using a formal method that typically uses three "common approaches to value". One of the methods in use is the Cost Approach, which is what it would cost to restore the improvements to the home, less the age and physical dilapidation, adding the land value. The Sales Comparison Approach deals with searching for similar properties nearby and discovering the value based on comparing those prior sales to the home being appraised. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a home. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

Describe what an appraiser does (Go to list of questions)

An appraiser provides a fair and credible opinion of market value, in the support of real property transactions. Appraisers show their expert conclusions in appraisal reports.

Why would a person request your services? (Go to list of questions)

There are a lot of reasons to order an appraisal from APPRAISALS "R" US with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:

To obtain a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
To challenge improperly assessed property taxes.
If you need to settle an estate.
To provide you an edge when purchasing a home.
To determine a reasonable price when selling your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every house.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

For a more extensive description of the appraisal process click here.

How is an appraiser different than a home inspector? (Go to list of questions)

Appraisers do not do perform residential property inspections and are not home inspectors. An inspection is a third-party investigation of the available structure and appliances of a property, from the roof to the foundation. For the most part, a home inspection report will evaluate the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Go to list of questions)

To be blunt, it's apples and oranges. The CMA depends on indistinct local market trends. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also include location and building values. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person creating the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, state licensed professional who bases their livelihood on valuing homes in and around Orange County creates the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.

What are the contents of an appraisal report? (Go to list of questions)

Every report must indicate a supported value opinion and should document the following:

The client and other intended users.
How the appraisal is supposed to be used.
The purpose of the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property attributes, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible considerations.
Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered while working up the appraisal.

For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been delivered, how can I have assurance that the final number is valid? (Go to list of questions)

In communicating an appraisal report, each appraiser must ensure the following:

That the information analysis implemented in the appraisal was suitable.

That substantial errors of omission or commission were not committed individually or collectively.

That appraisal services were rendered in a careful and conscientious fashion.

That a credible, defensible appraisal report was conferred.

There are rigorous classroom and practical experience requirements that must be fulfilled in order to become a licensed appraiser in California. Likewise, appraisers must abide by a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification is achieved through coursework, tests and practical experience. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Go to list of questions)

Mortgage lenders are an appraiser's typical customer, using their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Orange County or other areas? (Go to list of questions)

One of the most important activities of an appraiser is to collect property data. Data can be categorized as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Appraisers routinely need to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

Why should I hire a licensed appraiser? (Go to list of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Go to list of questions)

PMI is short for for Private Mortgage Insurance. PMI protects the lender if a borrower doesn't pay on the loan and the value of the house is less than the loan balance. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.


	The amount you keep from cancelling your PMI will make up for the cost of the appraisal in a matter of months. APPRAISALS "R" US is in the business of tracking real estate value trends in Anaheim and Orange County. Contact us today.

How do I get ready for the appraiser? (Go to list of questions)

We start with an inspection of the home. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general status of its features. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:

Records on the latest purchase of the property in the last three years.
Written property agreements, such as a maintenance easement for a shared driveway.
Title policy that describes encroachments or easements.
Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

Define "Market Value" (Go to list of questions)

In real estate appraising, Market Value (as opposed to Fair Market Value) is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Who has rights to the appraisal report? (Go to list of questions)

In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner hires an appraiser directly. In these scenarios, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others? (Go to list of questions)

It really depends on the market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe investment. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms were second, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.