Arizona Premier Appraisers has answers to "Frequently Asked Questions"


	Arizona Premier Appraisers is always happy to elaborate on any concerns you might have about appraisals or real estate in Maricopa County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons someone would require a real estate appraisal?
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 valid?
How are appraisers certified?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Maricopa County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Top)

The method of creating an appraisal consists of an inspection which forms an opinion of value. This opinion or estimate is found using a formal process that commonly utilizes three "common approaches to value". The Cost Approach is one of the processes that real estate appraisers use to find value; it involves figuring what the improvements would cost minus physical degradation, plus the land value. The Sales Comparison Approach deals with finding comparable properties in the vicinity and figuring out the value based on comparing those homes to the property in question. Being the most popular approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do? (Top)

An appraiser provides a professional, unbiased opinion of market value, often in the context of a real estate exchange. Appraisers summarize their expert investigation in appraisal reports.

What are the reasons someone would require a real estate appraisal? (Top)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:

To receive a loan.
If you would like to reduce your property tax burden.
To demonstrate a homeowner's acquired equity and remove PMI.
To fight inflated property taxes.
To settle an estate.
To provide you a negotiating tool when purchasing a home.
To figure out a reasonable property value when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every property.
If you ever find yourself in a lawsuit.

Click here for a more detailed explanation of the process dealing with getting an appraisal.

Is an appraisal the same as a home inspection? (Top)

Home inspectors do not estimate an opinion of value and do not do appraisal reports. An inspection is a third-party evaluation of the accessible structure and appliances of a house, from the roof to the foundation. The stereotypical 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 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)? (Top)

Frankly, they share nothing in common. The CMA uses market trends to generate most of their business. An appraisal relies on comparable sales that can be verified by records. In addition, the appraisal checks other factors like condition, neighborhood and building prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The person creating the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.

What does the appraisal report contain? (Top)

The main objective 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:

Who engaged the appraiser and whose purposes the appraisal is to serve.
The intended use of the report.
The reason for the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
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.

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

After completing the report, how can I have assurance that the final number is valid? (Top)

In the documentation of an appraisal, each appraiser must ensure the following:

That the information analysis implemented in the appraisal was suitable.

Whether individually or collectively, there were no substantial errors contained in the appraisal, nor any material details left out.

That appraisal services were delivered in a careful and judicious fashion.

The final appraisal report was understandable, sound and defensible.

To become a state licensed appraiser, there are strenuous education requirements as well as on the jobexperience that must be attained. Likewise, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Top)

Mortgage lenders are an appraiser's typical client, requiring their services to ensure property 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 data used to estimate values in Maricopa County or other areas? (Top)

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

General data is gathered from a numerous sources. To look up recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely need 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 service.

And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other properties in the same market.

Why should I hire a licensed appraiser? (Top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Arizona Premier Appraisers is the best documentation to ensure assets are divided properly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI stands for Private Mortgage Insurance. It protects the lender in the event a borrower defaults on the loan and the market price of the house is less than what is owed on the loan. 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 a matter of months. Arizona Premier Appraisers has years of experience with real estate value trends in Mesa and Maricopa County. Contact us today.

How do I get ready for the appraiser? (Top)

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 features. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

A plot plan or survey of the house and land (if readily available).
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (Top)

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? (Top)

In most real estate transactions, the appraisal is ordered by the lender. 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 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 engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements? (Top)

The added value of a particular amenity truly depends on the local market. For example, 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. 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, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.