Appraisal 1st Inc. has answers to "Frequently Asked Questions"

Appraisal 1st Inc. is always eager to address any questions you might have about appraisals or real estate in San Diego County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons a person would request your services?
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 are the contents of an appraisal report?
Upon completion of the report, how can I have certainty that the value conclusion is valid?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in San Diego County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



What is an appraisal?   (List of questions)

An appraisal report is an estimation that concludes with an opinion of value. The appraiser must use a several "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves concluding what the improvements would cost less physical degradation, adding the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable properties close by. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

Describe what an appraiser does   (List of questions)

An appraiser generates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers illustate their expert analysis in appraisal reports.


What are the reasons a person would request your services?   (List of questions)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an report include:
  • If you are applying for a loan.
  • To reduce your tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To fight high property taxes.
  • To deal with an estate.
  • To offer you an edge when purchasing a home.
  • To determine a reasonable property value when selling your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you are ever involved in a lawsuit.
Click here for a more detailed explanation of the process about getting an appraisal.


What is the difference between an appraisal and a home inspection?   (List of questions)

Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. An inspection is a third-party evaluation of the available structure and appliances of a property, from the top to the bottom. The general home inspector's report will include an evaluation of the condition of the house's heating system, 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.

My agent performed a CMA for me. Is that the same as an appraisal?   (List of questions)

Frankly, it's like comparing opera to country. The CMA depends on vague market trends. Appraisals use similar sales which are valid resources. Also, the appraisal looks at other factors like condition, neighborhood and replacement prices. 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.

The credentials of the person behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, California licensed professional who has formed their livelihood on valuing real estate in and around San Diego County creates the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.

What are the contents of an appraisal report?   (List of questions)

The main point 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 purpose of the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations 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.
  • What was included in the process of completing the appraisal.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the report, how can I have certainty that the value conclusion is valid?   (List of questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal contained an apropos analysis of the data.

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

  • That appraisal services were rendered in a careful and judicious fashion.

  • The final appraisal report was easy to explain, sound and defensible.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that enable us to formulate an unbiased opinion. Likewise, appraisers must abide by a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (List of questions) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification typically translates to many hours of classroom study, tests and practical experience. Once licensed, he/she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (List of questions)

Commonly, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

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

Compiling data is one of the primary activities of an appraiser. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a many places. To research recent sales to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

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


How can a licensed appraiser help me?   (List of questions)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want an appraisal. When selling your house, an appraisal assists you in setting the most appropriate price. 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. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


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

PMI stands for Private Mortgage Insurance. This additional plan covers the lender in the event a borrower is unable to pay on the loan and the value of the home is less than the loan balance. 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.

Does your monthly mortgage payment have a lineitem for PMI?Call Appraisal 1st Inc. today at (619) 265-9150 or send us an e-mail. Documentation of your home's present value could save you thousands.

Do you 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 condition of its amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if available).
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • Most recent real estate tax bill and or legal description of the property.

How does an appraiser 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."



Does the appraisal belong to the bank or the consumer?   (List of questions)

In most real estate transactions, the appraisal is ordered by the lender. 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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. 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.


Are some home improvements more worthwhile than others?   (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, 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

No matter where you go, however, renovating a kitchen is almost always a safe move. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms are right up there with kitchens, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.

Got a Question?

Do you have a question relating to real estate appraisals? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question