The Appraisal Firm has answers to "Frequently Asked Questions"


	The Appraisal Firm is willing to reply to any inquiries you might have about appraisals in Carlsbad and San Diego County. Contact us today to learn how we can help solve your valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person need services from The Appraisal Firm?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the appraisal has been completed, how can I have confidence that the value conclusion is legitimate?
What goes into an appraiser's certification?
Who employs appraisers?
Where does The Appraisal Firm get the information used to estimate values in San Diego 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?
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

Describe an appraisal (List of questions)

An appraisal is a thought process that concludes with an opinion of value. This opinion or estimate is concluded through a formal method that usually utilizes three "common approaches to value". The Cost Approach is one of the approaches that real estate appraisers use to find the value of a home; it involves finding what the improvements would cost without physical depreciation, plus the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which deals with figuring a comparison to similar properties nearby. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residential property. The Income Approach is generally 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.

What does an appraiser do? (List of questions)

An appraiser offers a professional, unbiased opinion of market value, often in the context of a real estate sale. Appraisers summarize their expert analysis in appraisal reports.

Why would a person need services from The Appraisal Firm? (List of questions)

There are a lot of reasons to purchase an appraisal from The Appraisal Firm with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:

To obtain a loan.
If you would like to lower your property tax burden.
To build a case for a homeowner's equity and remove insurance.
To contest improperly assessed property taxes.
To handle an estate.
To give you a leg-up when purchasing real estate.
To figure out an honest price when selling your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS require an appraisal on every home.
If you ever find yourself in a lawsuit.

For a more detailed explanation of the appraisal process click here.

What is the difference between an appraisal and a home inspection? (List of questions)

The appraiser is not a home inspector and he or she does not do a full home inspection. The point of a home inspection is to evaluate the structure of the house from basement to rooftop. The usual house inspector's report will contain an evaluation of the integrity of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)? (List of questions)

To be blunt, it's apples and oranges. The CMA uses market trends to conduct most of their business. The appraisal relies on similar proven comparable sales. The appraisal report will also contain location and construction costs. 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 behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, California licensed professional who made a career on valuing properties in and around San Diego County creates the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.

What's in an appraisal report? (List of questions)

The main purpose of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the report.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Pertinent property characteristics, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
All 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 used when completing the appraisal.

For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, how can I have confidence that the value conclusion is legitimate? (List of questions)

In the documentation of an appraisal, each appraiser must make sure of the following:

That the information analysis implemented in the appraisal was appropriate.

Whether individually or collectively, there were no crucial errors contained in the report, nor any relevant details left out.

That appraisal services were done in a careful and judicious manner.

That a trustworthy, substantiated appraisal report was communicated.

To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be attained. Likewise, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and experience working under a supervisor. Once licensed, he or she must then take continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who employs appraisers? (List of questions)

Most of the time, appraisers are hired by mortgage lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does The Appraisal Firm get the information used to estimate values in San Diego County or other areas? (List of questions)

Compiling information is one of the primary things an appraiser does. Data can be split into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is received from a number of places. To find out about recently sold homes to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And last but not least, 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? (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. If you're selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from The Appraisal Firm is the best documentation to ensure assets are divided properly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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

PMI is short for for Private Mortgage Insurance. It protects the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Is PMI a lineitem in your monthly mortgage payment?Call The Appraisal Firm today at 760-476-0130 or send us an e-mail. Documentation of your home's current value could save you thousands.

How do I get ready for the appraiser? (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 amenities. On the home's interior, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Records on the latest purchase of the property in the last three years.
Title policy that lists encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (List of questions)

In real estate appraising, 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."

Once complete, who actually owns the appraisal report? (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 entitled to a copy of the report - it's usually bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may define how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (List of questions)

It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

As a rule, the most value returned from renovating a home comes in the kitchen. 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, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.