DELMAN APPRAISALS has answers to "Frequently Asked Questions"


	DELMAN APPRAISALS is ready to talk to you about any questions you might have about appraisals or real estate in PALM SPRINGS and Riverside County. Contact DELMAN APPRAISALS today to learn how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would a person request a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the appraisal has been delivered, what assurance is there that the value conclusion is legitimate?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Riverside 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?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

What is an appraisal? (Return to top)

An appraisal report is a thought process that concludes with an opinion of value. This opinion or estimate is found through a formal process that typically utilizes three "common approaches to value". One of the methods is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. 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 produce.

Describe what an appraiser does (Return to top)

An appraiser generates a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers document their findings in appraisal reports.

Why would a person request a real estate appraisal? (Return to top)

There are many reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an appraisal include:

To obtain a loan.
If you would like to lower your property tax obligations.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To challenge high property taxes.
To settle an estate.
To give you an edge when purchasing real estate.
To find a reasonable property value when putting your home on the market.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every house.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

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

What is the difference between an appraisal and a home inspection? (Return to top)

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 appliances of a property, from the top to the foundation. For the most part, a home inspection report will discuss 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 other visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)

Frankly, they share nothing in common. The CMA uses market trends to generate most of their business. Appraisals use similar sales which are valid resources. In addition, the appraisal looks at other factors like condition, location and building prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, state licensed professional who made a career on valuing properties in and around Riverside County creates the appraisal. Further, the appraiser is an unbiased party, with no vested interest in the property's value, unlike the real estate agent, whose income is tied to the price of the home.

What's in an appraisal report? (Return to top)

Every report must reflect a believable estimate of value and must identify the following:

Who engaged the appraiser and other intended users.
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 factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed 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.
What was included in the activity of completing the assignment.

For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been delivered, what assurance is there that the value conclusion is legitimate? (Return to top)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used an appropriate 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 communicated.

There are rigorous education and practical experience requirements that must be adhered to in order to get an appraisal license in CALIFORNIA. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she must then take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Return to top)

Typically, appraisers are called upon by mortgage lenders to render a value opinion on a house involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Riverside County or other areas? (Return to top)

Compiling data is one of the main things an appraiser engages in. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Appraisers often have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.

Why do I need a professional appraisal? (Return to top)

An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. When selling your house, 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 commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. PMI takes care of the lender in case a borrower doesn't pay on the loan and the market price of the property 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.


	Did you secure your mortgage with less than 20% down? Call DELMAN APPRAISALS today at (760) 774-8013 to see if you can get rid of your Private Mortgage Insurance premium.

How do I get ready for the appraiser? (Return to top)

We start 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 status 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 shrubs and move 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.

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.
List of personal property to be sold with the building.
Title policy that describes encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
A list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (Return to top)

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."

Does the appraisal belong to the bank or the consumer? (Return to top)

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 entitled to a copy of the appraisal - it's usually included 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 cases, the appraiser may state 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? (Return to top)

It really depends on the 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 were second, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.