WalshStreet Appraisals has answers to "Frequently Asked Questions"

WalshStreet Appraisals is eager to talk to you about any concerns you might have about appraisals in Los Angeles and Los Angeles County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would require 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 does the appraisal report contain?
After completing the appraisal, how can I have confidence that the value conclusion is trustworthy?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
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?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Back to top)

The appraisal process is an estimation that leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. One of them is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar nearby properties which have recently sold. The Sales Comparison Approach is normally the most accurate and clearest indicator of a liklely sales price for a residential property. The Income Approach is generally used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

Describe what an appraiser does   (Back to top)

An appraiser offers a fair and credible assessment of market value, often in the context of a real estate exchange. Appraisers summarize their professional conclusions in appraisal reports.


What are the reasons a person would require a real estate appraisal?   (Back to top)

There are many reasons to get an appraisal from WalshStreet Appraisals with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge high property taxes.
  • To deal with an estate.
  • To give you a negotiating tool when purchasing real estate.
  • To find the most probable sales price when listing your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • 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 help.
For a more extensive description of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (Back to top)

Home inspectors do not produce an opinion of value and are not appraisers. An inspection is a third-party evaluation of the livable structure and systems of a property, from the top to the bottom. Generally, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Back to top)

Honestly, they have nothing in common. The CMA relies on indefinite trends in the market. Appraisals use similar sales which are valid resources. The appraisal report will also include area and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, California licensed professional who made their livelihood on valuing homes in and around Los Angeles County creates the appraisal. 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 sum for assignments, regardless of their value conclusion.

What does the appraisal report contain?   (Back to top)

The main objective 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, you'll usually see the following:
  • 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.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible items.
  • 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.
  • What was involved in the activity of completing the appraisal.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, how can I have confidence that the value conclusion is trustworthy?   (Back to top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained an appropriate analysis of the information.

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

  • That appraisal services were delivered in a careful and cognizant manner.

  • That a solid, substantiated appraisal report was imparted.
To become a state licensed appraiser, there are education requirements as well as experience that must be attained. Plus, appraisers must obey a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Licensing and certification is achieved through coursework, tests and real world experience. Once an appraiser is licensed, he/she must then engage in 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 typical client, requiring their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Los Angeles County or other areas?   (Back to top)

Collecting data is one of the primary roles of an appraiser. Data can be divided into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is received from a many sources. To find out about recently sold homes to be used as "comps", an appraiser will typically go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. 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?   (Back to top)

If you're making any kind of financial decision and the value of your home is relevant, you'll want an appraisal. For those selling a home, you'll want to determine 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. When buying, you can avoid overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.


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

PMI is an acronym for Private Mortgage Insurance. This supplementary policy guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes 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.

Did you secure your mortgage with less than 20% down? Contact WalshStreet Appraisals today at 323-936-9970 to see if you can get rid of your Private Mortgage Insurance premium.

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. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
  • Any information on the purchase of the property for the last three years.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • Information on "Homeowners Associations" or condominium covenants and fees.

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 certainly entitled to a copy of the report - 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 scenarios, the appraiser may stipulate 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.


Which home renovations add the most to the price?   (Back to top)

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

As a rule, the most value returned 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 are right up there with kitchens, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.