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Frequently Asked Questions

What is an appraisal?

An appraisal is a thought process leading to an opinion of value.  This opinion or estimate is arrived at through a formal process that typically uses the three ”common approaches to value”.  They are:

  • Cost Approach – which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value.
  • Sales Comparison Approach – which involves making a comparison to other similar, nearby properties which have recently sold.  The Sales Comparison Approach is normally the most accurate and best indicator of value for a residential property.
  • Income Approach, which is of most importance in appraising income producing properties – it involves estimating what an investor would pay based on the income produced by the property.
  • What assurance is there that the value indicated is valid?

What assurance is there that the value indicated is valid?

In developing and communicating an appraisal report, each appraiser must ensure the following:

  • That the information analysis utilized in the appraisal was appropriate.
  • That significant errors of omission or commission were not committed individually or collectively.
  • That appraisal services were not rendered in a careless or negligent manner.
  • That a credible, supportable appraisal report was communicated.

Is Zillow or Trulia right about my home value?

Zillow and Trulia are just a few of the popular online consumer real estate sites that provide an estimate of the value of your home.  These are just what we mentioned, estimations, done by a computer.  It is not possible for these computers to take into account all the particulars surrounding your specific house, the market that is resides in, and all the other factors a licensed appraiser reviews.  We encourage everyone to take these value estimates with a grain of salt.Think about it, if these online services were accurate, there would be no need for the nearly 100,000 licensed appraisers across the United States.

Which home renovations add the most to the price?

The answer to this is different depending upon the location of the home. Different markets value amenities differently. Adding a pool in Pam Springs CA may add significant value, while putting one in a home located in Malibu , CA might not have much impact.

As a rule, the most value returned from renovating a home comes in first the kitchen and then the master bathroom.  The best way to tell in the Los Angeles and Ventura market is to visit the Remodeling.net site and look over the latest Cost vs Value report for Los Angeles.

Who actually owns the Appraisal Report?

In most real estate transactions, the appraisal is ordered by the lender.  While the home buyer pays for the report as part of the loan process, the lender retains the right to use the report or any information contained within. The home buyer is entitled to a copy of the report – it is required to be included with all of 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 engages an appraiser directly.  In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax appeals, for example.  If not stipulated otherwise, the home owner can use the appraisal for any purpose.  Either way, the appraiser can not disclose the report to another outside party with the consent of the client that ordered it.

Who Actually Owns the Appraisal Report?

In most real estate transactions, the appraisal is ordered by the lender.  While the home buyer pays for the report as part of the loan process, the lender retains the right to use the report or any information contained within. The home buyer is entitled to a copy of the report – it is required to be included with all of 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 engages an appraiser directly.  In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax appeals, for example.  If not stipulated otherwise, the home owner can use the appraisal for any purpose.  Either way, the appraiser can not disclose the report to another outside party with the consent of the client that ordered it.

Why do I need a professional appraisal?

Anytime the value of your home or other real property is being used to make a significant financial decision, an appraisal helps.  If you’re selling your home, an appraisal helps you set the most appropriate value.  If you are buying, it makes sure you do not overpay.  If you are 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.  Knowing its true value means you can the right financial decisions.

What is “Market Value?

Market value, or fair market value, is the most probable price that a property should bring (will sell for) in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, 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: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised; (3) a reasonable time is allowed for exposure to the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) 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.  Keep in mind, the appraiser does not establish market value, the appraiser reports market value.