Desert Sky Appraisers has answers to "Frequently Asked Questions"


	Desert Sky Appraisers is always willing to handle any inquiries you might have about appraisals in Maricopa County. Contact us today to see how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What are the reasons I would need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the report, what assurance is there that the final number is valid?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does Desert Sky 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?
Does the appraiser need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?

What is an appraisal? (Top)

The appraisal process is an evaluation that leads to an opinion of value. This opinion or estimate is figured through the use of a formal method that usually 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 replace the improvements to the home, less the depreciation and physical dilapidation, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the income generated by the property.

What does an appraiser do? (Top)

An appraiser produces a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers exhibit their investigation in appraisal reports.

What are the reasons I would need a real estate appraisal? (Top)

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

If you are applying for a loan.
If you would like to reduce your property tax burden.
To build a case for a homeowner's equity and remove insurance.
To challenge inflated property taxes.
If you need to settle an estate.
To give you an edge when purchasing a home.
To find an honest price when listing 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 require an appraisal on every home.
It's possible you could be involved in a lawsuit - an appraisal will help.

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

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

Home inspectors do not provide an opinion of value and do not do appraisal reports. A third-party home inspector will investigate the structure of the home, from the top to the foundation. The archetypal home inspector's report will include an evaluation of the integrity of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)? (Top)

Simply put, it's like comparing Shakespeare to reality TV. What the CMA relies upon are superficial trends. The appraisal is reliant on specific proven comparable sales. Area and architectural values are also a priority in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is who's behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

What's in an appraisal report? (Top)

The main point of an appraisal report 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 whose purposes the appraisal is to serve.
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 description, legal attributes, economic factors, 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 items.
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.
What was involved in the process of completing the job.

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

After completing the report, what assurance is there that the final number is valid? (Top)

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

The appraisal contained an apropos analysis of the data.

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

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

The final appraisal report was clear, legitimate and conclusive.

There are intense classroom and real world experience requirements that must be satisfied in order to get an appraisal license in Arizona. Plus, appraisers must follow a strict industry code of ethics and comply with 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).

(Top) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once licensed, he/she is required to complete 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? (Top)

Mortgage lenders are an appraiser's most likely client, requesting their services to ensure a home 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 Desert Sky Appraisers get the information used to estimate values in Maricopa County or other areas? (Top)

Gathering data is one of the primary occupations of an appraiser. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is gathered from a many places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

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

What can a full appraisal do for me? (Top)

If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Desert Sky Appraisers is the best way to ensure assets are split up evenly. A home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.

What exactly is PMI and how can I get rid of it? (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. This supplementary policy covers the lender in case a borrower defaults on the loan and the value of the house is less than what the borrower still owes on 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.


	Is PMI a lineitem in your monthly mortgage payment?Call Desert Sky Appraisers today at 480-361-9493 or send us an e-mail. Documentation of your home's current value could save you thousands.

Does the appraiser need anything from the homeowner in advance? (Top)

The first step in most appraisals is the home inspection. 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 features. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior 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 readily available).
A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
Information on "Homeowners Associations" or condominium covenants and fees.
A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation 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."

Who has rights to the appraisal report? (Top)

In most real estate transactions, the appraisal is ordered by the lender. 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 certainly 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.

The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (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, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.