Associate Appraisers of America has answers to "Frequently Asked Questions"


	Associate Appraisers of America is always eager to handle any questions you might have about appraisals in Orange County and the greater Southern California area. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons I would require services from Associate Appraisers of America?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
After completing the appraisal, what assurance is there that the value indicated is valid?
How hard is it to become certified?
Who hires an appraiser?
Where does an appraiser get the information used to estimate values in Orange County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Do you need anything from the homeowner in advance?
Define "Market Value"
Once complete, 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)

An appraisal is an estimation that concludes with an opinion of value. This opinion or estimate is found by a formal process that typically uses three "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical degradation, plus the land value. The Sales Comparison Approach involves finding comparable houses nearby and discerning value based on making a comparison of those properties to the home in question. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a house. 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 income generated by the property.

Describe what an appraiser does (List of questions)

An appraiser forumlates a fair and credible assessment of market value, in the support of real property exchanges. Appraisers reveal the details of their conclusions in appraisal reports.

What are the reasons I would require services from Associate Appraisers of America? (List of questions)

There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:

If you are applying for a loan (note - only a lender can order an appraisal for a loan unless the loan is funded through "private money").
To lower your property taxes.
To show a homeowner has 30% equity and remove PMI insurance.
To challenge high property taxes.
If you need to take care of an estate.
To offer you an edge when purchasing real estate.
To determine an honest property value when selling real estate.
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 help.

If you need a more detailed explanation of the appraisal process, please click here.

Is an appraisal the same as a home inspection? (List of questions)

Appraisers do not do perform residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the livable structure and systems of a home, from the roof to the foundation. Usually, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed 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? (List of questions)

To be blunt, it's like comparing broadband and dial-up. What the CMA depends on are vague trends. Appraisals use comparable sales which are verifiable resources. The appraisal report will also include area and construction costs. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the most significant factor is the person behind the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for assignments, regardless of their outcome.

What can I expect to see in my appraisal report? (List of questions)

Every report should indicate a believable estimate of value and should clearly state the following:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the report.
The appraisal's purpose.
The type of value reported and a definition of that value.
The effective date of the appraisal.
Pertinent property characteristics, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
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.
The scope of work used when completing the appraisal.

For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what assurance is there that the value indicated is valid? (List of questions)

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

That the information analysis utilized in the appraisal was proper.

That substantial errors of omission or commission were not committed individually or collectively.

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

The final appraisal report was clear, sound and not easily discredited.

To become a state licensed appraiser, there are extensive education requirements as well as experience that must be logged - all with the end goal of gaining the skills required to render unbiased value opinions. In addition, appraisers must abide by a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions)

Licensing and certification requires coursework, tests and practical 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 hires an appraiser? (List of questions)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Orange County or other areas? (List of questions)

One of the main tasks an appraiser must accomplish is to gather property data. Data can be classified 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 collected from a numerous places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.

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

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Associate Appraisers of America is the best way to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that? (List of questions)

PMI is short for for Private Mortgage Insurance. This supplementary plan covers the lender in case a borrower doesn't pay on the loan and the value of the property is less than the loan balance. 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 the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Associate Appraisers of America when it comes to analyzing real estate appreciation in Huntington Beach and Orange County. Contact us today.

Do you need anything from the homeowner in advance? (List of questions)

The first step in most appraisals is the home inspection. During this process, we will come to your home and measure it, determine the layout of the rooms inside, confirm all aspects of the home's general condition, and take several photos of your house for inclusion in the report. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access appliances like furnaces and water heaters.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:

Written property agreements, such as a maintenance easement for a shared driveway.
List of personal property to be sold with the building.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A list of "proposed" improvements if the property is to be appraised "as complete".

Define "Market Value" (List of questions)

In real estate appraising, Market Value (as opposed to Fair 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."

Once complete, 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 appraisal - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these situations, 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)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 were second, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.