WalshStreet Appraisals has answers to "Frequently Asked Questions"
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Define the term "Appraisal"
Describe what an appraiser does
Why would I need services from WalshStreet Appraisals?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the report, how can I have assurance that the final number is accurate?
What goes into an appraiser's certification?
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?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
Define "Market Value"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?
Define the term "Appraisal" (Go to list of questions)
An appraisal report is an evaluation allowing the appraiser to come to an opinion of value.
This opinion or estimate is discerned through a formal process that commonly uses the three main "common approaches to value".
One of the three is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value.
The most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which deals with making a comparison to similar houses nearby.
The Sales Comparison Approach is normally the most accurate and clearest indicator of value for a residential property.
The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.
Describe what an appraiser does (Go to list of questions)
An appraiser provides a professional, unbiased assessment of market value, often in the context of a real estate exchange.
Appraisers summarize their analysis in appraisal reports.
Why would I need services from WalshStreet Appraisals? (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 obtaining an report include:
If you need more information about the appraisal process, please click here.
- If you are applying for a loan.
- If you would like to lower your property tax obligations.
- To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
- To contest high property taxes.
- To handle an estate.
- To give you a leg-up when purchasing real estate.
- To find the most probable property value when putting your home on the market.
- 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 be involved in a lawsuit - an appraisal will definitely help.
The appraiser is not a home inspector and does not do a complete home inspection.
The purpose of a home inspection is to investigate the structure of the property from foundation to attic.
The general house inspector's report will include an evaluation of the integrity of the house'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.
Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)
Simply, they have nothing in common.
The CMA relies on vague trends in the market.
Appraisals use comparable sales which are valid resources.
Location and building costs are also important in an appraisal.
The CMA will provide a non-specific figure.
Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.
But the largest differentiator is the person doing the report.
Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's.
A certified, state licensed professional who bases a career on valuing real estate in and around Los Angeles County creates the appraisal.
Moreover, the appraiser is an independent party, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.
The main purpose 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:
For a more detailed view of 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 appraisal.
- The appraisal's purpose.
- The type of value reported and a definition of that value.
- The effective date of the value opinion.
- Relevant property characteristics, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible considerations.
- 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 while working up the appraisal.
After completing the report, how can I have assurance that the final number is accurate? (Go to list of questions)
In communicating an appraisal report, each appraiser must ensure the following:
To become a state licensed appraiser, there are education requirements as well as practical experience that must be attained - all with the objective of gaining the skills required to provide unbiased value opinions.
Likewise, appraisers must obey a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
- The appraisal used analysis of the information.
- Whether individually or collectively, there were no grave errors contained in the appraisal, nor any relevant details left out.
- That appraisal services were not carried out in a careless or negligent fashion.
- That a believable, defensible appraisal report was conferred.
(Go to list of questions)
Licensing and certification requires coursework, tests and real world experience.
Once licensed, he/she must then complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.
Who engages the services of appraisers? (Go to list of questions)
Commonly, appraisers are employed by lenders to render a value opinion on a house involved in a loan transaction.
Appraisers also provide opinions for legal settlements, 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 primary tasks an appraiser must accomplish is to collect data.
Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.
General data is collected from a number of sources.
To research recent sales to be used as "comps", we often use the local Multiple Listing Service.
Tax records and other courthouse 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 most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.
What can a full appraisal do for me? (Go to list of questions)
An appraisal is a valuable tool whenever your home's value is pertinent 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.
If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly.
A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.
What exactly is PMI and how can I get rid of it? (Go to list of questions)
PMI stands for Private Mortgage Insurance.
PMI protects 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.
You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.
Does your monthly house payment include a fee for PMI?Call WalshStreet Appraisals today at 323-936-9970 or send us an e-mail. A current appraisal could save you thousands.
Do you need anything from the homeowner in advance? (Go to list of questions)
We start with an inspection of the property.
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 features.
The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any landscaping and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.
You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
- Records on the latest purchase of the property in the last three years.
- Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
- Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
- Brag sheet that lists 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).
- A bill for your most recent real estate taxes which should also contain a legal description of the property.
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."
Who has rights to the appraisal report? (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 certainly 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 how the appraisal can be used; 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.
How can I get the most ROI out of home improvements? (Go to list of questions)
The answer to this is different depending upon the location of the home.
if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.
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, yielding 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 an oddball for your neighborhood in terms of size.