WalshStreet Appraisals has answers to "Frequently Asked Questions"
||WalshStreet Appraisals is happy to talk to you about any inquiries you might have about appraisals in Los Angeles and Los Angeles County.
Contact WalshStreet Appraisals 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 request services from WalshStreet Appraisals?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Once the appraisal has been completed, what assurance is there that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Los Angeles County or other areas?
What can a full appraisal do for 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
What is "Market Value?"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?
Define the term "Appraisal" (Back to top)
The method of performing an appraisal consists of an evaluation which forms an opinion of value.
There are three "common approaches to value" which assists the appraiser come to this opinion or valuation.
One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the house, less the depreciation and physical deterioration, plus the land value.
The Sales Comparison Approach involves finding similar houses nearby and discovering the value based on comparing those houses to the house being appraised.
Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house.
One of the least common approaches in appraising homes is the Income Approach, which is generally used to figure the value of a property based on what an investor would pay based on the capital produced by the building.
Describe what an appraiser does (Back to top)
An appraiser produces a fair and credible assessment of market value, in the support of real estate exchanges.
Appraisers reveal the details of their expert findings in appraisal reports.
What are the reasons I would request services from WalshStreet Appraisals? (Back to top)
There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions.
Other reasons for ordering an appraisal include:
If you need more information regarding the appraisal process, please click here.
- If you are applying for a loan.
- To reduce your tax burden.
- To demonstrate a homeowner's acquired equity and remove PMI.
- To contest improperly assessed property taxes.
- To deal with an estate.
- To provide you a leg-up when purchasing real estate.
- To figure out a reasonable property value when selling your home.
- To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
- Government agencies such as the IRS need an appraisal on every house.
- It's possible you could be involved in a lawsuit - an appraisal will help.
Appraisers do not do provide residential property inspections and are not home inspectors.
An inspection is a third-party investigation of the accessible structure and appliances of a house, from the top to the bottom.
The standard property inspector's report will contain an evaluation of the integrity of the home'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.
What is the difference between an appraisal and a comparative market analysis (CMA)? (Back to top)
Frankly, it's like comparing sugar and saccharin.
The CMA depends on indefinite local market trends.
Appraisals use comparable sales which are verifiable resources.
In addition, the appraisal verifies other factors like condition, area and building 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 hands down the most significant difference between a CMA and an appraisal.
Real estate agents write CMA's, and they don't always know the whole market or bear 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.
Further, the appraiser is an independent voice, with no conditional interest in the property's value, unlike the real estate agent, who gets a commission based upon the price of the home.
The main purpose of an appraisal document is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report
- The client 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 value opinion.
- Relevant property characteristics, including: location, physical attributes, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible factors.
- All 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 used when completing the job.
Once the appraisal has been completed, what assurance is there that the final number is trustworthy? (Back to top)
In communicating an appraisal report, each appraiser must ensure the following:
To become a state licensed appraiser, we must meet intense education and experience requirements that prepare us to produce an unbiased opinion.
In addition, appraisers must follow a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- The appraisal used a suitable analysis of the information.
- That substantial errors of omission or commission were not committed individually or collectively.
- That appraisal services were not rendered in a careless or negligent manner.
- That a believable, supportable appraisal report was conferred.
(Back to top)
Licensing and certification takes coursework, tests and experience working under a supervisor.
Once licensed, he/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 engages the services of appraisers? (Back to top)
Mortgage lenders are an appraiser's most likely customer, using their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan.
Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.
Where does an appraiser get the information used to estimate values in Los Angeles County or other areas? (Back to top)
Compiling information is one of the main tasks an appraiser engages in.
Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.
General data is collected from a many sources.
Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables.
To double-check actual sales prices, we research items in the assessor's office and other public documents.
Appraisers often 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 product.
And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.
What can a full appraisal do for me? (Back to top)
An appraisal is a valuable tool whenever your home's value is relevant to some financial decision.
For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that.
If you're buying, it makes sure you don't overpay.
For parties settling an estate or divorce, an appraisal from WalshStreet Appraisals is the best way to ensure assets are divided evenly.
A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
My mortgage statement has an item on it for PMI? Can I get rid of that? (Back to top)
PMI is an acronym for Private Mortgage Insurance.
This supplementary plan takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan.
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.
Has your real estate appreciated since you first purchased? Contact WalshStreet Appraisals today at 323-936-9970 to see if you can cancel your Private Mortgage Insurance payment.
Should I do anything in advance of the appraisal appointment (Back 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 amenities.
Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any bushes 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.
- A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
- Information on "Homeowners Associations" or condominium covenants and fees.
- A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
- A list of "proposed" improvements when the property is being appraised "as complete".
What is "Market Value?" (Back 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? (Back 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 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.
This rule doesn't apply when a home owner hires an appraiser directly.
In these scenarios, 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 do whatever they want with the appraisal.
Are some home improvements more worthwhile than others? (Back to top)
The added value of a particular amenity truly depends on the local market.
putting in 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 move.
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 were second, returning 85%.
Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.