WalshStreet Inc. has answers to "Frequently Asked Questions"


	WalshStreet Inc. is always willing to talk to you about any questions you might have about appraisals or real estate in Los Angeles and Los Angeles County. Contact us today to talk about how we can help you with your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would require a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the report is done, what guarantee is there that the value indicated is legitimate?
What goes into an appraiser's certification?
Who hires WalshStreet Inc.
Where does WalshStreet Inc. get the information used to estimate values in Los Angeles County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
What does "Market Value" mean?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?

Define the term "Appraisal" (Return to top)

An appraisal report is an estimation leading to an opinion of value. There are three "common approaches to value" which assists the appraiser come to this opinion or valuation. The Cost Approach is one of the methods that appraisers use to find the value of a property; it involves figuring what the improvements would cost less physical deterioration, plus the land value. The Sales Comparison Approach involves searching for comparable properties in the vicinity and discovering the value based on comparing those properties to the home being investigated. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a residence. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to figure the market value of a property based on what an investor would pay based on the income produced by the property.

Describe what an appraiser does (Return to top)

An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers illustate their expert investigation in appraisal reports.

What are the reasons I would require a real estate appraisal? (Return to top)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:

If you are applying for a loan.
To lower your tax burden.
To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
To fight high property taxes.
If you need to settle an estate.
To offer you a negotiating tool when purchasing real estate.
To determine a reasonable property value when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

Click here for a more extensive explanation of the process involved in getting an appraisal.

Is an appraisal the same as a home inspection? (Return to top)

Appraisers do not do perform home inspections and are not home inspectors. The point of a home inspection is to investigate the structure of the home from bottom to rooftop. The archetypal home 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 accessible 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)? (Return to top)

Honestly, they share nothing in common. What the CMA relies upon are superficial trends. An appraisal relies on comparable sales that can be proven by records. In addition, the appraisal looks at other factors like condition, location and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the most significant factor is the person behind the report. 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. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their outcome.

What are the contents of an appraisal report? (Return to top)

Each report should indicate a supported estimate of value and must document the following:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
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!)
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
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.
What was included in the process of completing the assignment.

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

Once the report is done, what guarantee is there that the value indicated is legitimate? (Return to top)

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

The appraisal used an appropriate analysis of the information.

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

That appraisal services were not conducted in a careless or negligent manner.

That a believable, defensible appraisal report was conferred.

There are intense education and practical experience requirements that must be satisfied in order to achieve the designation of "licensed appraiser" in California. Plus, appraisers must follow a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification takes classroom study, tests and practical experience. Once an appraiser is licensed, he/she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires WalshStreet Inc. (Return to top)

Most of the time, appraisers are called upon by lenders to estimate the value of a home involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does WalshStreet Inc. get the information used to estimate values in Los Angeles County or other areas? (Return to top)

Collecting data is one of the main things an appraiser engages in. Data can be classified as either 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 numerous places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.

And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

Why do I need a professional appraisal? (Return to top)

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 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. 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. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (Return to top)

PMI stands for Private Mortgage Insurance. It protects the lender in case a borrower defaults on the loan and the value of the property is lower than what is owed on the loan. 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.


	Is PMI something increasing your monthly house payment?Call WalshStreet Inc. today at 323-936-9970 or send us an e-mail. A current appraisal could save you thousands.

Do you need anything from the homeowner in advance? (Return to top)

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 . Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure we can easily access appliances 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:

Any information on the purchase of the property for the last three years.
Information on any written private easements, such as a shared driveway with a neighbor.
Most recent real estate tax bill from Los Angeles and or legal description of the property.
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean? (Return to top)

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? (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the appraisal - 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.

I want to get more for my house. Where should I spend money renovating? (Return to top)

Like all things real estate, this is dependent on a home's location. 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.

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 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.