Safe Appraisal Services has answers to "Frequently Asked Questions"


	Safe Appraisal Services is more than happy to answer any questions you might have about appraisals or real estate in Pueblo and Pueblo County. Contact Safe Appraisal Services today to talk about how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would someone require services from Safe Appraisal Services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
After completing the report, how can I have a guarantee that the final number is veritable?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Pueblo 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?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (Top)

The process of producing an appraisal consists of an evaluation which leads to an opinion of value. This opinion or estimate is found using a formal method that commonly uses the three main "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the property, less the age and physical deterioration, adding the land value. The Sales Comparison Approach deals with searching for similar properties in close proximity and discovering the value based on making a comparison of those homes to the home being appraised. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a home. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does (Top)

An appraiser forumlates a fair and credible opinion of market value, often in the context of a real estate purchase. Appraisers demonstrate their expert findings in appraisal reports.

Why would someone require services from Safe Appraisal Services? (Top)

There are many reasons to order an appraisal from Safe Appraisal Services with the usual reason being real estate and mortgage transactions. A few other reasons for getting an appraisal include:

If you are applying for a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To challenge high property taxes.
If you need to settle an estate.
To offer you a negotiating tool when purchasing a home.
To determine an honest sales price when selling your home.
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 extensive explanation of the process dealing with getting an appraisal.

How is an appraiser different than a home inspector? (Top)

Appraisers do not do perform residential property inspections and are not home inspectors. A third-party home inspector will evaluate the structure of the home, from the top to the foundation. The stereotypical home inspector's report will contain an evaluation of the condition of the property's heating systems, 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.

What is the difference between an appraisal and a comparative market analysis (CMA)? (Top)

To be blunt, it's like comparing Shakespeare to reality TV. The CMA depends on indistinct market trends. An appraisal relies on comparable sales that can be verified by records. The appraisal report will also contain neighborhood and building prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a flat fee for assignments, regardless of their outcome.

What are the contents of an appraisal report? (Top)

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, you'll usually see the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
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.
The scope of work considered while working up the job.

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

After completing the report, how can I have a guarantee that the final number is veritable? (Top)

In communicating an appraisal report, each appraiser must ensure the following:

The appraisal used a suitable analysis of the information.

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

That appraisal services were rendered in a careful and conscientious fashion.

The final appraisal report was understandable, sound and not easily discredited.

To become a state licensed appraiser, we must fulfill extensive education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must obey a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating 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. However, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he/she must then complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who employs appraisers? (Top)

Typically, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction - to make sure the house 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 information used to estimate values in Pueblo County or other areas? (Top)

One of the main things an appraiser does is to gather property data. 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 while on site.

General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often have to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

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

Why should I hire a licensed appraiser? (Top)

An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. For those selling a home, you'll want to figure out the 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, you can avoid overpaying by getting 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 means you can make informed financial decisions.

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

PMI is short for for Private Mortgage Insurance. It covers the lender if a borrower defaults on the loan and the value of the house is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Does your monthly mortgage payment have a lineitem for PMI?Call Safe Appraisal Services today at (719) 320-6890 or send us an e-mail. A new appraisal could save you thousands.

Should I do anything in advance of the appraisal inspection (Top)

We begin with an inspection of the home. 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. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.

To help expedite our work plus ensure a more accurate report, attempt if possible to have the following items:

Written property agreements, such as a maintenance agreement for a shared driveway.
Title policy that lists encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Brag sheet that lists major home improvements and enhancements, 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 when the property is being appraised "as complete".

How does an appraiser define "Market Value"? (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? (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 entitled to a copy of the report - 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.

This rule doesn't apply when a home owner hires an appraiser directly. In these situations, the appraiser may stipulate 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? (Top)

The added value of a particular amenity truly depends on the local market. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become atypical for your neighborhood in terms of size.