WalshStreet Appraisals has answers to "Frequently Asked Questions"

WalshStreet Appraisals is always ready to talk to you about 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?
What would cause me to need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Upon completion of the report, how can I have confidence that the value indicated is legitimate?
How are appraisers certified?
Who hires an appraiser?
Where does an appraiser get the information 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?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Define the term "Appraisal"   (Go to list of  questions)

An appraiser performs an estimation that produces an opinion of value. The real estate appraiser will use a number of "approaches," typically three, to arrive at the estimation of market value. One of the methods is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most accurate and clearest indicator of a liklely sales price for a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Go to list of  questions)

An appraiser forumlates a professional, unbiased assessment of market value, often in the context of a real estate purchase. Appraisers show their expert findings in appraisal reports.


What would cause me to need a real estate appraisal?   (Go to list of  questions)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax obligations.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge high property taxes.
  • To settle an estate.
  • To give you a leg-up when purchasing a home.
  • To determine a likely sales price when putting your home on the market.
  • To protect 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 property.
  • If you ever find yourself in a civil case.
If you need more information about the appraisal process, please click here.


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

Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the property from foundation to rooftop. Generally, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

To be blunt, it's like comparing broadband and dial-up. The CMA uses market trends to create most of their business. Appraisals use comparable sales which are verifiable resources. In addition, the appraisal looks at other factors like condition, area and building prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of the person behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, California licensed professional who bases their livelihood on valuing properties in and around Los Angeles County creates the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.

What's in an appraisal report?   (Go to list of  questions)

The main point of an appraisal report 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 other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value reported 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!)
  • Characteristics of the property that have a bearing on the value, 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, trade fixtures and even intangible considerations.
  • All 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.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the report, how can I have confidence that the value indicated is legitimate?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained analysis of the information.

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

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

  • The final appraisal report was easy to explain, sound and not easily discredited.
To become a state licensed appraiser, there are extensive education requirements as well as experience that must be attained - all with the end goal of being able to render unbiased value opinions. In addition, appraisers must abide by a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and real world experience. Once licensed, he or she is required to engage in continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who hires an appraiser?   (Go to list of  questions)

Most of the time, appraisers are called upon by lenders to render a value opinion on a home involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Los Angeles County or other areas?   (Go to list of  questions)

One of the most important things an appraiser does is to collect property data. Data can be categorized 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 during an inspection.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

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


How can a licensed appraiser help me?   (Go to list of  questions)

If you're making any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. When selling your house, an appraisal helps you set the most appropriate price. 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. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to 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 market price of the house is less than what the borrower still owes on 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.

The savings from cancelling your PMI will make up for the price of the appraisal in no time. Nobody is more qualified than WalshStreet Appraisals when it comes to analyzing real estate appreciation in Los Angeles and Los Angeles County. Contact us today.

How do I get ready for the appraiser?   (Go to 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 condition of its amenities. 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 landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:
  • Any information on the purchase of the property for the last three years.
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill and or legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

Define "Market Value"   (Go to 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?   (Go to list of  questions)

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 entitled to a copy of the report - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these situations, the appraiser may define how the appraisal can be used; 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.


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

The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.