Sandra Koutsopoulos has answers to "Frequently Asked Questions"


	Sandra Koutsopoulos is always prepared to address any questions you might have about appraisals in Riverside and Riverside County. Contact us today to talk about how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
What would cause me to require a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the assignment has been completed, what assurance is there that the final number is valid?
How difficult is it to become certified?
Who employs appraisers?
Where does an appraiser get the data used to estimate values in Riverside 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
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?

What is an appraisal? (Go to list of questions)

An appraisal is a thought process allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, minus age and physical dilapidation, plus the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar nearby properties which have recently sold. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a 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 capital produced by the property.

Describe what an appraiser does (Go to list of questions)

An appraiser provides a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers illustate their expert analysis in appraisal reports.

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

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

To obtain a loan.
To lower your property taxes.
To build a case for a homeowner's equity and remove insurance.
To contest improperly assessed property taxes.
To handle an estate.
To offer you an edge when purchasing real estate.
To find an honest sales price when selling your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Government agencies such as the IRS need 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 involved in getting an appraisal.

Is an appraisal the same as a home inspection? (Go to list of questions)

Appraisers do not do perform residential property inspections and are not home inspectors. The purpose of a home inspection is to evaluate the structure of the home from foundation to top. For the most part, a home inspection report will discuss the amenities and the requirements of the house: 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)? (Go to list of questions)

To be honest, they have nothing in common. The CMA relies on vague market trends. An appraisal relies on comparable sales that can be proven by records. Area and construction values are also precedent in an appraisal. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the most significant factor is who's creating 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 has formed their livelihood on valuing real estate in and around Riverside County is behind the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their outcome.

What's in an appraisal report? (Go to list of questions)

Every report should indicate a credible value opinion and should document the following:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The appraisal's purpose.
The type of value reported and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.
Pertinent property attributes, including: location, physical description, 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 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 entailed in the activity of completing the assignment.

For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, 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:

That the information analysis contained in the appraisal was appropriate.

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

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

The final appraisal report was clear, legitimate and conclusive.

To become a state licensed appraiser, there are strenuous education requirements as well as practical experience that must be logged - all with the end goal of being able to render unbiased value opinions. In addition, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification is achieved through coursework, tests and practical experience. Once an appraiser is 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 employs appraisers? (Go to list of questions)

Mortgage lenders are an appraiser's most likely customer, needing 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 divorce and estate settlements.

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

One of the most important things an appraiser does is to compile data. Data can be described as either Specific or General. Specific data is collected 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 number of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood system.

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

Why should I hire a licensed appraiser? (Go to list of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI is an acronym for Private Mortgage Insurance. PMI covers the lender if a borrower defaults on the loan and the market price of the house is less than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.


	Has your real estate appreciated since you first purchased? Call Sandra Koutsopoulos today at 714-394-6809 to see if you can save money by removing your Private Mortgage Insurance premium.

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

We begin with an inspection of the home. 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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

Records on the latest purchase of the property in the last three years.
List of personal property to be sold with the building.
Most recent real estate tax bill and or legal description of the property.
A list of any major home improvements and upgrades, 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).
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

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."

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.

The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, the appraiser may state how the appraisal can be used; 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.

Are some home improvements more worthwhile than others? (Go to list of questions)

It really depends on the market. 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. 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%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.