Anchor Appraisals has answers to "Frequently Asked Questions"


	Anchor Appraisals is always prepared to reply to any concerns you might have about appraisals or real estate in Los Angeles County. Contact Anchor Appraisals today to see how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would request a real estate appraisal?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Once the assignment has been delivered, what guarantee is there that the value conclusion is accurate?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Los Angeles County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
Define "Market Value"
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

Describe an appraisal (Go to list of questions)

The procedure of performing an appraisal report deals with an inspection which forms an opinion of value. This opinion or estimate is found by a formal method that typically utilizes the three main "common approaches to value". One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the property, less the depreciation and physical deterioration, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with making a comparable analysis to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. 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 (Go to list of questions)

An appraiser produces an unprejudiced and well supported determination of market value, in the support of real estate transactions. Appraisers present their professional analysis in appraisal reports.

What are the reasons a person would request a real estate appraisal? (Go to list of questions)

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

To obtain a loan.
To lower your tax burden.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To challenge high property taxes.
To deal with an estate.
To provide you an edge when purchasing a home.
To determine a likely price when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every home.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

How is an appraisal different than a home inspection? (Go to list of questions)

Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the accessible structure and mechanical systems of a home, from the top to the bottom. The usual home inspector's report will include an evaluation of the integrity of the property'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.

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

To be honest, they share nothing in common. What the CMA depends on are vague trends. Appraisals use comparable sales which are verifiable resources. Area and construction costs are also a priority in an appraisal. 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.

Who's behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value of a home, unlike the real estate agent, whose income is tied to the price of the home.

What does the appraisal report contain? (Go to list of questions)

The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:

The client and other intended users.
The intended use of the appraisal.
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.
Relevant property attributes, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible items.
All 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.
What was included in the process of completing the job.

For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been delivered, what guarantee is there that the value conclusion is accurate? (Go to list of questions)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:

That the information analysis utilized in the appraisal was suitable.

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

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

That a believable, substantiated appraisal report was conferred.

There are intense classroom and on the job experience requirements that must be satisfied in order to get an appraisal license in California. Likewise, appraisers must abide by a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Regulations regarding licensing and certification are different from state to state. In general, licensing and certification is commonly associated with many hours of classroom study, tests and practical experience. Once licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Go to list of questions)

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

Where does an appraiser get the data used to estimate values in Los Angeles County or other areas? (Go to list of questions)

Gathering data is one of the main things an appraiser does. Data can be described as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a number of places. To research recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Appraisers routinely need 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 product.

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

What can a full appraisal do for me? (Go to list of questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Anchor Appraisals is the best way to ensure assets are split up evenly. 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? (Go to list of questions)

PMI stands for Private Mortgage Insurance. PMI covers the lender in the event a borrower defaults on the loan and the value of the house 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.


	The money you keep from cancelling your PMI will make up for the cost of the appraisal in no time. Anchor Appraisals is in the business of tracking value trends in Torrance and Los Angeles County. Contact us today.

Do you need anything from me in advance? (Go to 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. Inside, pick up any clutter and make sure we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

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

Information on the latest purchase of the property in the last three years.
Written property agreements, such as a maintenance agreement for a shared driveway.
Most recent real estate tax bill and or legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

Define "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."

Who actually owns the appraisal report? (Go to list of questions)

For mortgage transactions, the lender requests 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 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 cases, the appraiser may state the purpose of the appraisal; 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.

How can I get the most ROI out of home improvements? (Go to list of questions)

The answer to this is different depending upon the location of the home. 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

As a rule, the best ROI from renovating a home comes in the kitchen. 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 an oddball for your neighborhood in terms of size.