Bay Appraisals has answers to "Frequently Asked Questions"


	Bay Appraisals is always happy to reply to any questions you might have about appraisals or real estate in Sunnyvale County. Contact us today to see how we can help you with your specific valuation problems.

Define the term "Appraisal"
What does an appraiser do?
Why would someone request a real estate appraisal?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the appraisal is done, what guarantee is there that the value indicated is accurate?
How are appraisers certified?
Who employs appraisers?
Where does Bay Appraisals get the data used to estimate values in Sunnyvale County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?

Define the term "Appraisal" (Return to top)

An appraiser performs an evaluation that leads to an opinion of value. The appraiser will typically use a number of "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the approaches that real estate appraisers use to find the value of a house; it involves concluding what the improvements would cost minus physical deterioration, plus the land value. Another of the methods is the Sales Comparison Approach - which concerns making a comparable analysis to other similar properties within a close proximity which have recently sold. Being the most common approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residential property. The Income Approach is generally 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 produce.

What does an appraiser do? (Return to top)

An appraiser provides an impartial and well supported determination of market value, in the support of real property transactions. Appraisers exhibit their professional findings in appraisal reports.

Why would someone request a real estate appraisal? (Return to top)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for obtaining an report include:

If you are applying for a loan.
If you would like to lower your property tax obligations.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To contest inflated property taxes.
If you need to settle an estate.
To offer you a leg-up when purchasing a home.
To find the most probable price when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
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 description of the appraisal process click here.

How is an appraiser different than a home inspector? (Return to top)

Home inspectors do not come to an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the available structure and electrical and mechanical systems of a house, from the roof to the foundation. Generally, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)

To be blunt, it's apples and oranges. The CMA uses market trends to create most of their business. Appraisals use comparable sales which are verifiable resources. Also, the appraisal looks at other factors like condition, neighborhood and construction costs. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, California licensed professional who made their livelihood on valuing real estate in and around Sunnyvale County creates the appraisal. Further, the appraiser is an unbiased party, with no conditional interest in the value conclusion, unlike the real estate agent, whose income is tied to the price of the home.

What does the appraisal report contain? (Return to top)

The main point 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:

Who engaged the appraiser and other intended users.
How the appraisal is supposed to be used.
The purpose of the appraisal.
The type of value contained and a definition of the value reported.
The effective date of the appraisal.
Pertinent property attributes, including: location, physical attributes, legal attributes, economic attributes, the real property interest 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 the like.
Division of interest, such as fractional interest, physical segment and partial holding.
The scope of work used to complete the assignment.

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

Once the appraisal is done, what guarantee is there that the value indicated is accurate? (Return to top)

In the documentation of an appraisal, each appraiser must make sure of the following:

That the information analysis implemented in the appraisal was proper.

Whether individually or collectively, there were no substantial 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 solid, substantiated appraisal report was communicated.

There are rigorous education and experience requirements that must be fulfilled in order to achieve the title of "licensed appraiser" in California. Plus, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers? (Return to top)

Most of the time, appraisers are employed by mortgage lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Bay Appraisals get the data used to estimate values in Sunnyvale County or other areas? (Return to top)

Collecting data is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a variety of sources. To research recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public 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 assembles general data from his or her past experience in doing assignments for other houses in the same market.

What can a full appraisal do for me? (Return to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your house, an appraisal helps you set the most appropriate price. 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. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make informed financial decisions.

What exactly is PMI and how can I get rid of it? (Return to top)

PMI is the common abbreviation for for Private Mortgage Insurance. It takes care of the lender in the event a borrower defaults on the loan and the market price of the house is less than the balance of 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.


	Has your real estate appreciated since you first purchased? Contact Bay Appraisals today at 9163931832. You may be able to get rid of your Private Mortgage Insurance payment.

How do I get ready for the appraiser? (Return to 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. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

A survey or plot map of the property and building (if available).
List of personal property to be sold with the home.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
A list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean? (Return to 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."

Who actually owns the appraisal report? (Return to top)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is entitled to a copy of the appraisal - it's usually bundled 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements? (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

As a rule, the most value returned 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.