Appraisal Evaluations, Inc. has answers to "Frequently Asked Questions"


	Appraisal Evaluations, Inc. is always ready to elaborate on any questions you might have about appraisals in Burbank and Los Angeles County. Contact Appraisal Evaluations, Inc. today to talk about how we can help you with your specific valuation problems.

Describe an appraisal
What does an appraiser do?
Why would I require a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Once the appraisal has been delivered, what guarantee is there that the value indicated is accurate?
How are appraisers certified?
Who hires an appraiser?
Where does Appraisal Evaluations, Inc. get the data used to estimate values in Los Angeles County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?

Describe an appraisal (List of questions)

An appraisal report is an investigation leading to an opinion of value. The real estate appraiser will use a number of "approaches," typically three, to come to the estimation of market value. One of them is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for comparable houses in the vicinity and finding value based on comparing those homes to the home being investigated. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to find the value of a property based on what an investor would pay based on the income produced by the property.

What does an appraiser do? (List of questions)

An appraiser forumlates an impartial and well substantiated determination of market value, often in the context of a real estate sale. Appraisers present their professional findings in appraisal reports.

Why would I require a real estate appraisal? (List of questions)

There are a lot of reasons to order an appraisal from Appraisal Evaluations, Inc. with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:

To get a loan.
If you would like to reduce your property tax obligations.
To demonstrate a homeowner's acquired equity and remove insurance.
To contest improperly assessed property taxes.
To handle an estate.
To provide you a leg-up when purchasing real estate.
To find a likely sales price when selling your home.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you are ever involved in a civil case.

If you need a more detailed explanation of the appraisal process, please click here.

How is an appraisal different than a home inspection? (List of questions)

Home inspectors do not generate an opinion of value and do not do appraisal reports. The purpose of a home inspection is to evaluate the structure of the house from basement to attic. The usual property inspector's report will include an evaluation of the integrity of the house's heating system, 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.

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

Frankly, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to conduct most of their business. The appraisal depends on similar definite comparable sales. Location and building prices are also important in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who has formed their livelihood on valuing real estate in and around Los Angeles County creates the appraisal. Further, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the real estate agent, whose income is tied to the value of the home.

What does the appraisal report contain? (List of questions)

The main point of an appraisal document 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 other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value contained and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Pertinent property attributes, including: location, physical description, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work considered to complete the assignment.

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

Once the appraisal has been delivered, what guarantee is there that the value indicated is accurate? (List of questions)

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

That the information analysis implemented in the appraisal was proper.

Whether individually or collectively, there were no major errors contained in the appraisal, nor any material details left out.

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

That a believable, supportable appraisal report was communicated.

To become a state licensed appraiser, there are strenuous education requirements as well as experience that must be attained. Likewise, appraisers must stick to a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification requires coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires an appraiser? (List of questions)

Typically, appraisers are hired by mortgage lenders to render a value opinion on a home involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Appraisal Evaluations, Inc. get the data used to estimate values in Los Angeles County or other areas? (List of questions)

Compiling information is one of the primary activities of an appraiser. Data can be divided into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is collected from a variety of places. To look up recent sales to be used as "comps", we often 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 often need to report when a property is in a flood zone, so 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 past experience in creating appraisals for other properties in the same market.

How can a licensed appraiser help me? (List of questions)

An appraisal is a worthwhile anytime the value of your home is relevant to a financial decision. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it? (List of questions)

PMI is the common abbreviation for for Private Mortgage Insurance. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the home is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	The savings from dropping the PMI required when you got your mortgage pays for the appraisal in a matter of months. Nobody is more qualified than Appraisal Evaluations, Inc. when it comes to analyzing real estate appreciation in Burbank and Los Angeles County. Contact us today.

How do I get ready for the appraiser? (List of questions)

The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access items like furnaces and water heaters.

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

A plot plan or survey of the house and land (if available).
Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
Most recent real estate tax bill and or legal description of the property.

How does an appraiser define "Market Value"? (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."

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

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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 bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

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

Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the best ROI from renovating a home comes in the kitchen. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms weren't far behind, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.