Powers Appraisal Service has answers to "Frequently Asked Questions"


	Powers Appraisal Service is willing to reply to any questions you might have about appraisals or real estate in Scottsdale and Maricopa County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
What are the reasons someone would require services from Powers Appraisal Service?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
After completing the report, how can I have confidence that the value indicated is trustworthy?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Maricopa County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Do you need anything from me in advance?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

What is an appraisal? (Return to top)

An appraisal report is an investigation allowing the appraiser to come to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser come to this opinion or valuation. One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the property, less the depreciation and physical deterioration, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns making a comparison to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do? (Return to top)

An appraiser provides a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers demonstrate their expert conclusions in appraisal reports.

What are the reasons someone would require services from Powers Appraisal Service? (Return to top)

There are many reasons to order an appraisal from Powers Appraisal Service with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal report include:

To get a loan.
If you would like to lower your property tax burden.
To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
To contest high property taxes.
To deal with an estate.
To provide you an edge when purchasing real estate.
To determine a likely property value when putting your home on the market.
To protect 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.
If you are ever involved in a lawsuit.

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

What is the difference between an appraisal and a home inspection? (Return to top)

Home inspectors do not provide an opinion of value and are not appraisers. A third-party home inspector will evaluate the structure of the property, from the top to the foundation. The archetypal home 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.

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

Frankly, it's night and day. The CMA utilizes market trends to create most of their business. The appraisal depends on specific proven comparable sales. The appraisal report will also include location and construction costs. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person behind the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the agent, whose income is tied to the value of the home.

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

Each appraisal should demonstrate a credible value opinion and must identify 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 value opinion.(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 factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible factors.
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 appraisal.

For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have confidence that the value indicated is trustworthy? (Return to top)

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

That the information analysis contained in the appraisal was appropriate.

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

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

The final appraisal report was understandable, legitimate and conclusive.

To become a state licensed appraiser, there are education requirements as well as practical experience that must be logged. In addition, appraisers must follow a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and documenting its results are insured 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 real world experience. Once licensed, he/she is required to take 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? (Return to top)

Commonly, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Maricopa County or other areas? (Return to top)

One of the main tasks an appraiser engages in is to collect property data. Data can be classified as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a number of places. To look up recent sales to be used as "comps", we often use the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers often need to report when a property is 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 collective knowledge gained from doing assignments for other properties in the same market.

How can a licensed appraiser help me? (Return to top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. When selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, 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? (Return to top)

PMI stands for Private Mortgage Insurance. This additional plan takes care of the lender if a borrower defaults on the loan and the market price of the property 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.


	Did you have less than 20% to put down on your mortgage? Call Powers Appraisal Service today at 6023161860 to see if you can cancel your Private Mortgage Insurance premium.

Do you need anything from me in advance? (Return to top)

The first step in most appraisals is the property inspection. 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. On the home's interior, pick up any clutter and make sure 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, attempt if possible to have the following items:

Written property agreements, such as a maintenance easement for a shared driveway.
Title policy that lists encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being 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."

Does the appraisal belong to the bank or the consumer? (Return to top)

For mortgage transactions, the lender orders 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 certainly 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.

The exception to this rule is when a home owner engages an appraiser directly. 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 stipulated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (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 best ROI 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 were second, yielding 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.