Central Arizona Real Estate Appraisers has answers to "Frequently Asked Questions"

Central Arizona Real Estate Appraisers is always ready to talk to you about any concerns you might have about appraisals or real estate in Chandler and Maricopa County. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
What would cause me to request a real estate appraisal?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Once the assignment is done, what assurance is there that the final number is valid?
How are appraisers certified?
Who engages the services of appraisers?
Where does Central Arizona Real Estate Appraisers get the information used to estimate values in Maricopa County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



Describe an appraisal   (Go to list of  questions)

The process of producing an appraisal report deals with an evaluation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation. The Cost Approach is one of the methods that appraisers use to find value; it involves figuring what the improvements would cost minus physical depreciation, plus the land value. The Sales Comparison Approach involves searching for similar properties in the vicinity and finding value based on comparing those homes to the property being investigated. Being the most popular approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a house. One of the least common approaches in appraising houses is the Income Approach, which is generally used to determine the value of a property based on what an investor would pay based on the income produced by the building.

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

An appraiser produces a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers illustate their analysis in appraisal reports.


What would cause me to request a real estate appraisal?   (Go to list of  questions)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To contest high property taxes.
  • To deal with an estate.
  • To give you a negotiating tool when purchasing a home.
  • To find a reasonable price when selling your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more detailed explanation of the process of getting an appraisal.


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

Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the house from bottom to rooftop. The archetypal house 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 accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

To be honest, they have nothing in common. The CMA utilizes market trends to generate most of their business. An appraisal is based on comparable sales that can be validated by records. Area and building values are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind 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. A certified, state licensed professional who has formed a career on valuing real estate in and around Maricopa County is behind the appraisal. Further, the appraiser is an independent party, with no conditional 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?   (Go to list of  questions)

The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • 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 appraisal.(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 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.
  • 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 used to complete the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment is done, what assurance is there that the final number is valid?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal contained an appropriate analysis of the data.

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

  • That appraisal services were not rendered in a careless or negligent fashion.

  • The final appraisal report was easy to explain, sound and conclusive.
There are rigorous education and real world experience requirements that must be satisfied in order to achieve the title of "licensed appraiser" in Arizona. In addition, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to list of  questions) Licensing and certification takes classroom study, tests and practical experience. Once licensed, he or she is required to 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?   (Go to list of  questions)

Mortgage lenders are an appraiser's most likely customer, using their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Central Arizona Real Estate Appraisers get the information used to estimate values in Maricopa County or other areas?   (Go to list of  questions)

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

General data is gathered from a variety of places. To research recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. To verify actual sales prices, we look at items in the assessor's office and other public documents. Appraisers routinely have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.

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

An appraisal is a valuable tool anytime the value of your home is relevant to a financial decision. For those selling a home, you'll want to figure out a 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 those settling an estate or divorce, an appraisal from Central Arizona Real Estate Appraisers is the best documentation to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

What exactly is PMI and how can I get rid of it?   (Go to list of  questions)

PMI is short for for Private Mortgage Insurance. PMI takes care of the lender in the event a borrower doesn't pay on the loan and the market price of the house is less than what the borrower still owes on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Did you secure your mortgage with less than 20% down? Contact Central Arizona Real Estate Appraisers today at 480-632-2150. You may be able to cancel your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment   (Go to list of  questions)

We start with an inspection of the property. During this process, the appraiser 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 . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can easily access items like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, try if possible to have the following items:
  • Information on the latest purchase of the property in the last three years.
  • List of personal property to be sold with the building.
  • Title policy that lists encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A list of "suggested" improvements when the property is being appraised "as complete".

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

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?   (Go to list of  questions)

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 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 the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.

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

This really depends on where the home is. 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

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.