WalshStreet Appraisals has answers to "Frequently Asked Questions"
||WalshStreet Appraisals is more than happy to answer any questions you might have about appraisals or real estate in Los Angeles County.
Don't hesitate to contact us today.
Describe an appraisal
Describe what an appraiser does
Why would a person require your services?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the appraisal has been completed, what guarantee is there that the final number is valid?
What does it mean for an appraiser to be licensed?
Who hires an appraiser?
Where does an appraiser get the data used to estimate values in Los Angeles County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?
Describe an appraisal (Return to top)
The method of creating an appraisal consists of an estimation which leads to an opinion of value.
There are three "common approaches to value" which helps the appraiser arrive at this opinion or valuation.
One of the processes in use is the Cost Approach, which finds what it would cost to restore the improvements to the property, minus age and physical dilapidation, plus the land value.
Another of the approaches is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar properties within a close vicinity which have recently sold.
Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house.
One of the least common approaches in appraising residential properties is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the capital produced by the property.
Describe what an appraiser does (Return to top)
An appraiser offers an impartial and well substantiated assessment of market value, to be used in making real estate transactions.
Appraisers show their professional analysis in appraisal reports.
Why would a person require your services? (Return to top)
There are many reasons to purchase an appraisal from WalshStreet Appraisals with the usual reason being real estate and mortgage transactions.
Other reasons for getting an appraisal include:
For a more detailed explanation of the appraisal process click here.
- To receive a loan.
- If you would like to lower your property tax obligations.
- To demonstrate a homeowner's acquired equity and remove PMI.
- To fight inflated property taxes.
- If you need to settle an estate.
- To offer you an edge when purchasing real estate.
- To figure out the most probable sales price when selling real estate.
- To ensure parties are provided just compensation in eminient domain cases.
- Government agencies such as the IRS require an appraisal on every house.
- If you ever find yourself in a lawsuit.
Appraisers do not do provide residential property inspections and are not home inspectors.
An inspection is a third-party investigation of the livable structure and systems of a home, from the roof to the bottom.
Generally, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible 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)? (Return to top)
To be honest, they have nothing in common.
The CMA relies on vague trends in the market.
An appraisal utilizes comparable sales that can be validated by public record.
Also, the appraisal looks at other factors like condition, neighborhood and construction prices.
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.
Who's behind the report is actually the most significant difference between a CMA and an appraisal.
A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts.
The appraisal is created by a licensed, certified professional who has made a career out of valuing properties.
Further, the appraiser is an independent voice, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.
Every report must demonstrate a believable estimate of value and should identify the following:
For a more in depth look at all that goes into an appraisal report click here: Sample Appraisal Report
- Who engaged the appraiser and other intended users.
- 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 value opinion.
- Relevant 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 items.
- 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 used to complete the appraisal.
Once the appraisal has been completed, what guarantee is there that the final number is valid? (Return to top)
In the documentation of an appraisal, each appraiser must ensure the following:
There are intense classroom and on the job experience requirements that must be met in order to become a licensed appraiser in California.
Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- That the information analysis utilized in the appraisal was proper.
- That significant errors of omission or commission were not committed individually or collectively.
- That appraisal services were not executed in a careless or negligent manner.
- That a credible, substantiated appraisal report was conferred.
(Return to top)
Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience.
Once licensed, he/she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.
Who hires an appraiser? (Return to top)
Mortgage lenders are an appraiser's typical client, requesting their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan.
Attorneys and CPAs also hire appraisers for asset division and estate settlements.
Where does an appraiser get the data used to estimate values in Los Angeles County or other areas? (Return to top)
Gathering data is one of the primary occupations of an appraiser.
Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are documented 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.
To verify actual sales prices, we research items in the assessor's office and other public documents.
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 assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
How can a licensed appraiser help me? (Return to top)
An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision.
If you're selling your home, an appraisal helps you set the most appropriate price.
When buying, you can avoid overpaying by getting an independent appraisal.
For people settling an estate or divorce, an appraisal from WalshStreet Appraisals is the best documentation to ensure assets are split up evenly.
Simply put, a house 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? (Return to top)
PMI is short for for Private Mortgage Insurance.
It guards the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the loan balance.
Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.
Is PMI something increasing your monthly house payment?Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A current appraisal could save you thousands.
Should I do anything in advance of the appraisal appointment (Return to top)
We start with an inspection of the home.
During this process, the appraiser will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report.
The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.
To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
- A survey or plot map of the property and building (if readily available).
- Written property agreements, such as a maintenance agreement for a shared driveway.
- Title policy that describes encroachments or easements.
- Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
Define "Market Value" (Return to top)
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."
Does the appraisal belong to the bank or the consumer? (Return to top)
For mortgage transactions, the lender orders the appraisal, either directly or through a third party.
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.
This rule doesn't apply when a home owner hires an appraiser directly.
In these cases, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.
How can I get the most ROI out of home improvements? (Return to top)
This really depends on where the home is.
installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
No matter where you go, however, renovating a kitchen is almost always a safe investment.
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%.
Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.