Elite Appraisal Group has answers to "Frequently Asked Questions"

Elite Appraisal Group is always prepared to talk to you about any inquiries you might have about appraisals. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
Why would I require services from Elite Appraisal Group?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Upon completion of the appraisal, what assurance is there that the value indicated is accurate?
How hard is it to become certified?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Orange 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?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Describe an appraisal   (Go to list of  questions)

The procedure of producing an appraisal consists of an estimation which leads to an opinion of value. This opinion or estimate is found by a formal method that commonly utilizes the three main "common approaches to value". One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the depreciation and physical dilapidation, plus the land value. The Sales Comparison Approach involves finding comparable houses in close proximity and discerning value based on comparing those homes to the property being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

What does an appraiser do?   (Go to list of  questions)

An appraiser produces an objective and well supported assessment of market value, to be used in making real estate transactions. Appraisers demonstrate their conclusions in appraisal reports.


Why would I require services from Elite Appraisal Group?   (Go to list of  questions)

There are a lot of reasons to purchase an appraisal from Elite Appraisal Group with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
  • To receive a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge improperly assessed property taxes.
  • To settle an estate.
  • To give you a leg-up when purchasing a home.
  • To determine a reasonable property value when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • If you ever find yourself in a civil case.
If you need more information about the appraisal process, please click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

The appraiser is not a home inspector and does not do a full home inspection. An inspection is a third-party investigation of the livable structure and mechanical systems of a property, from the roof to the foundation. Generally, a home inspection report will discuss the amenities and the necessities of the house: air conditioning (weather permitting), electrical services, 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 other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Frankly, they have nothing in common. What the CMA depends on are vague trends. An appraisal relies on comparable sales that can be validated by records. Location and construction costs are also a priority in an appraisal. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. A certified, California licensed professional who bases a career on valuing properties in and around Orange 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 previously agreed upon sum for assignments, regardless of their value conclusion.

What's in an appraisal report?   (Go to list of  questions)

The main point of an appraisal report is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The purpose of the assignment.
  • The type of value contained 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!)
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, 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 items.
  • Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work considered when completing the assignment.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the appraisal, what assurance is there that the value indicated is accurate?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal contained a suitable analysis of the data.

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

  • That appraisal services were not conducted in a careless or negligent manner.

  • That a trustworthy, defensible appraisal report was conferred.
To become a state licensed appraiser, there are education requirements as well as practical experience that must be attained. Plus, appraisers must follow a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions)

Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he or 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?   (Go to list of  questions)

Typically, appraisers are called upon by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the house is indeed adequate collateral for the 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 Orange County or other areas?   (Go to list of  questions)

Compiling information is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a many places. Local Multiple Listing Services (MLS) provide data on recently sold homes that could be used as comparables. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.


Why should I hire a licensed appraiser?   (Go to 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 figure out 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 commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Elite Appraisal Group is the best documentation to ensure assets are split up evenly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


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

PMI is an acronym for Private Mortgage Insurance. It protects the lender in case a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Is PMI a part of your monthly house payment? Contact Elite Appraisal Group today. Documentation of your home's current value could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Go to list of  questions)

We start with an inspection of the property. 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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • Any records on the purchase of the property for the last three years.
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill from Orange and or legal description of the property.
  • Brag sheet that lists major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?"   (Go to 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?   (Go to list of  questions)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is entitled to a copy of the appraisal - it's usually bundled 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 situations, the appraiser may stipulate how the appraisal can be used; 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.


Which home renovations add the most to the price?   (Go to list of  questions)

The added value of a particular amenity truly depends on the local market. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the best ROI 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, yielding 85%. Adding bedrooms and baths can also boost the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.