Real Estate Appraisals has answers to "Frequently Asked Questions"

Real Estate Appraisals is always eager to answer any inquiries you might have about appraisals in Los Angeles County. Contact us today to talk about how we can help you with your valuation problems.

Describe an appraisal
What does an appraiser do?
What would cause me to request a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the report is done, how can I have a guarantee that the final number is valid?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does Real Estate Appraisals get the data used to estimate values in Los Angeles County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (List of questions)

The process of writing an appraisal deals with an investigation 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 methods is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the processes is the Sales Comparison Approach - which concerns finding a comparison to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (List of questions)

An appraiser forumlates a professional, unbiased assessment of market value, often in the context of a real estate sale. Appraisers reveal the details of their findings in appraisal reports.


What would cause me to request a real estate appraisal?   (List of questions)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To build a case for a homeowner's equity and remove insurance.
  • To contest high property taxes.
  • To settle an estate.
  • To give you a negotiating tool when purchasing real estate.
  • To find a reasonable property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraisal different than a home inspection?   (List of questions)

The appraiser is not a home inspector nor does he/she do a full home inspection. The point of a home inspection is to investigate the structure of the home from bottom to rooftop. The general property inspector's report will include an evaluation of the integrity of the property's heating system, 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (List of questions)

Frankly, they have nothing in common. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are valid resources. Also, the appraisal verifies other factors like condition, area and construction costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person creating the report is frankly the biggest 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 has formed a career on valuing homes in and around Los Angeles County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat fee for work they perform, regardless of their outcome.

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

The main point of an appraisal report is to give a value opinion, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • The type of value reported and a definition of the value reported.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property attributes, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
  • Any 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 included in the activity of completing the assignment.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the report is done, how can I have a guarantee that the final number is valid?   (List of questions)

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

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

  • That appraisal services were provided in a careful and judicious manner.

  • That a believable, supportable appraisal report was conferred.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that give us the background to produce an unbiased opinion. Plus, appraisers must obey a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Licensing and certification is achieved through coursework, tests and experience working under a supervisory appraiser. Once licensed, he/she must then complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who employs appraisers?   (List of questions)

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

Where does Real Estate Appraisals get the data used to estimate values in Los Angeles County or other areas?   (List of questions)

Collecting information is one of the primary occupations of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a many places. To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


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

If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting 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. Don't make decisions in the dark with a professional appraisal.


What exactly is PMI and how can I get rid of it?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. It takes care of the lender if a borrower defaults on the loan and the market price of the home is lower than the balance of 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.

Is PMI something increasing your monthly mortgage payment?Call Real Estate Appraisals today at 310.372.4144 or send us an e-mail. Documentation of your home's present value could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (List of questions)

We begin 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 status of its amenities. On the home's interior, pick up any clutter and make sure we can get to 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.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A list of "suggested" improvements when the property is being appraised "as complete".

Define "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."



Who actually owns the appraisal report?   (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.

This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may stipulate 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.


I want to get more for my house. Where should I spend money renovating?   (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 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.

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