WalshStreet Appraisals has answers to "Frequently Asked Questions"

WalshStreet Appraisals is always eager to handle any questions you might have about appraisals in Los Angeles County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would I require a real estate appraisal?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the appraisal, how can I have assurance that the value indicated is accurate?
How are appraisers certified?
Who are an appraiser's customers?
Where does WalshStreet Appraisals get the data used to estimate values in Los Angeles County or other areas?
Why do I need a professional appraisal?
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 is "Market Value?"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



Define the term "Appraisal"   (List of questions)

The method of creating an appraisal report consists of an investigation which forms an opinion of value. The appraiser will use a few "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the house, minus depreciation and physical deterioration, adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with finding a comparison to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a property. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the money generated by the property.

What does an appraiser do?   (List of questions)

An appraiser offers a fair and credible determination of market value, in the support of real property exchanges. Appraisers demonstrate their expert findings in appraisal reports.


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

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an report include:
  • To receive a loan.
  • To lower your property taxes.
  • To show a homeowner has 30% equity and remove insurance.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you a leg-up when purchasing real estate.
  • To determine a likely sales price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
If you need a more detailed explanation of the appraisal process, please click here.


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

The appraiser is not a home inspector and does not do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The archetypal property 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 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)?   (List of questions)

Honestly, they have nothing in common. What the CMA relies upon are superficial trends. The appraisal relies on similar definite comparable sales. The appraisal report will also include location and building values. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is who's creating the report. Real estate agents produce 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 makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their value conclusion.

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

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The reason for the assignment.
  • The type of value contained and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 considered to complete the appraisal.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, how can I have assurance that the value indicated is accurate?   (List of questions)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal contained an apropos analysis of the information.

  • Whether individually or collectively, there were no critical errors contained in the report, nor any material details left out.

  • That appraisal services were not executed in a careless or negligent fashion.

  • The final appraisal report was transparent, credible and defensible.
To become a state licensed appraiser, there are intense education requirements as well as practical experience that must be attained - all with the objective of being able to render unbiased value opinions. Likewise, appraisers must abide by a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Licensing and certification is achieved through classroom study, tests and experience working under a supervisory appraiser. Once licensed, he or she must then engage in continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (List of questions)

Mortgage lenders are an appraiser's most likely customer, requiring 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 WalshStreet Appraisals get the data used to estimate values in Los Angeles County or other areas?   (List of questions)

Gathering data is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood product.

And last but not least, the appraiser assembles general data from his or her past experience in creating appraisals for other properties in the same market.


Why do I need a professional appraisal?   (List of questions)

An appraisal is a worthwhile whenever the value of your home is relevant to some financial decision. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from WalshStreet Appraisals is the best documentation to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.


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. PMI takes care of the lender in case a borrower is unable to pay on the loan and the value of the home is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Does your monthly loan payment have a lineitem for PMI?Call WalshStreet Appraisals today at 323-936-9970 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if available).
  • List of personal property to be sold with the home.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • Most recent real estate tax bill and or legal description of the property.

What is "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."



Does the appraisal belong to the bank or the consumer?   (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 report - 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 hires an appraiser directly. In these cases, the appraiser may stipulate 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?   (List of questions)

Like all things real estate, this is dependent on a home's location. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the best ROI 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 weren't far behind, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.