Colorado Appraisal Group has answers to "Frequently Asked Questions"


	Colorado Appraisal Group is willing to answer any questions you might have about appraisals or real estate in Eagle and Eagle County. Don't hesitate to contact us today.

What is an appraisal?
What does an appraiser do?
What would cause me to request your services?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Upon completion of the appraisal, what assurance is there that the value indicated is veritable?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in Eagle 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 appointment
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?

What is an appraisal? (Top)

An appraiser performs an evaluation that generates an opinion of value. The real estate appraiser must use a number of "approaches," typically three, to conclude the estimation of market value. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves figuring what the improvements would cost without physical deterioration, adding the land value. Easily the most common approach in finding the value of a house is the Sales Comparison Approach which concerns concluding a comparison to comparable houses close by. Being the most common approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. The Income Approach is mainly used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do? (Top)

An appraiser generates an objective and well substantiated opinion of market value, often in the context of a real estate purchase. Appraisers illustate their expert findings in appraisal reports.

What would cause me to request your services? (Top)

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:

To receive a loan.
To lower your property taxes.
To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
To challenge inflated property taxes.
If you need to take care of an estate.
To offer you a leg-up when purchasing a home.
To figure out a reasonable property value when listing your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

For a more detailed explanation of the appraisal process click here.

What is the difference between an appraisal and a home inspection? (Top)

The appraiser is not a home inspector and he or she does not do a full home inspection. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. For the most part, a home inspection report will discuss the amenities and the requirements of the property: 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, visible 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)? (Top)

Simply put, it's like comparing Shakespeare to reality TV. The CMA uses market trends to generate most of their business. The appraisal depends on specific valid comparable sales. The appraisal report will also include location and building values. 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 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 created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What can I expect to see in my appraisal report? (Top)

Each appraisal must reflect a credible estimate of value and will identify the following:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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.
What was included in the process of completing the job.

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

Upon completion of the appraisal, what assurance is there that the value indicated is veritable? (Top)

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

The appraisal contained an appropriate analysis of the information.

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

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

That a trustworthy, defensible appraisal report was communicated.

There are intense education and on the job experience requirements that must be fulfilled in order to get an appraisal license in Colorado. In addition, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting 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. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/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 are an appraiser's customers? (Top)

Mortgage lenders are an appraiser's typical client, using their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Eagle County or other areas? (Top)

One of the main tasks an appraiser performs is to compile data. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we research tax records and other public documents. Appraisers routinely need 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 assembles general data from his or her past experience in creating appraisals for other properties in the same market.

Why should I hire a licensed appraiser? (Top)

If you're involved in any kind of financial decision and the value of your home matters, you'll want an appraisal. When selling your house, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from Colorado Appraisal Group is the best documentation to ensure assets are split up evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.

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

PMI is an acronym for Private Mortgage Insurance. PMI covers the lender in the event a borrower doesn't pay on the loan and the value of the house is less than what is owed on the loan. 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.


	Does your monthly loan payment include a fee for PMI?Call Colorado Appraisal Group today at 970-328-1534 or send us an e-mail. A current appraisal could save you thousands.

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

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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any bushes and relocate any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to items like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Information on the latest purchase of the property in the last three years.
List of personal property to be sold with the building.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
Information on "Homeowners Associations" or condominium covenants and fees.

What does "Market Value" mean? (Top)

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."

Once complete, who actually owns the appraisal report? (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 certainly entitled to a copy of the appraisal - 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, 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.

I want to get more for my house. Where should I spend money renovating? (Top)

Like all things real estate, this is dependent on a home's location. 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 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.