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BOB DINNING, APPRAISER has answers to "Frequently Asked Questions"

BOB DINNING, APPRAISER is eager to reply to any concerns you might have about appraisals or real estate in San Juan County. Contact BOB DINNING, APPRAISER today to learn how we can help you with your valuation problems.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would request 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 can I expect to see in my appraisal report?
Once the report has been completed, what guarantee is there that the final number is accurate?
What does it mean for an appraiser to be licensed?
Who hires BOB DINNING, APPRAISER
Where does BOB DINNING, APPRAISER get the data used to estimate values in San Juan 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 me in advance?
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Back to top)

An appraisal report is an inspection leading to an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or valuation. The Cost Approach is one of the processes that appraisers use to find value; it involves discerning what the improvements would cost less physical degradation, plus the land value. The Sales Comparison Approach deals with finding similar houses in close proximity and figuring out the value based on comparing those properties to the property in question. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the capital generated by the property.

Describe what an appraiser does   (Back to top)

An appraiser forumlates an unbiased and well justified opinion of market value, often in the context of a real estate sale. Appraisers illustate their professional conclusions in appraisal reports.


What are the reasons a person would request a real estate appraisal?   (Back to top)

There are a lot of reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:
  • If you are applying for a loan.
  • To reduce your tax burden.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To fight high property taxes.
  • To handle an estate.
  • To offer you an edge when purchasing a home.
  • To find an honest property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process dealing with getting an appraisal.


Is an appraisal the same as a home inspection?   (Back to top)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party evaluation of the available structure and systems of a house, from the roof to the foundation. Commonly, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Back to top)

Simply put, it's apples and oranges. The CMA uses market trends to generate most of their business. An appraisal relies on comparable sales that can be verified by records. The appraisal report will also contain neighborhood and construction prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is the person behind the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who made a career on valuing homes in and around San Juan County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - 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 can I expect to see in my appraisal report?   (Back to top)

The main point of an appraisal document is to provide a value opinion, 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 appraisal's purpose.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed 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.
  • What was involved in the activity of completing the appraisal.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


Once the report has been completed, what guarantee is there that the final number is accurate?   (Back to top)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal used an appropriate analysis of the data.

  • Whether individually or collectively, there were no crucial errors contained in the report, nor any relevant details left out.

  • That appraisal services were rendered in a careful and judicious fashion.

  • The final appraisal report was understandable, sound and not easily discredited.
To become a state licensed appraiser, there are education requirements as well as experience that must be logged - all with the end goal of gaining the skills required to provide unbiased value opinions. Plus, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and real world experience. Once licensed, he/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 hires BOB DINNING, APPRAISER   (Back to top)

Commonly, appraisers are hired by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does BOB DINNING, APPRAISER get the data used to estimate values in San Juan County or other areas?   (Back to top)

One of the primary things an appraiser does is to gather property data. Data can be divided into Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. 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 houses in the same market.


What can a full appraisal do for me?   (Back 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. If you're selling your house, 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. For parties settling an estate or divorce, an appraisal from BOB DINNING, APPRAISER 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.


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

PMI is an acronym for Private Mortgage Insurance. This added plan takes care of the lender in the event a borrower is unable to pay on the loan and the market price of the home 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.

The savings from cancelling your PMI pays for the appraisal in a matter of months. BOB DINNING, APPRAISER is in the business of tracking value trends in Farmington and San Juan County. Contact us today.

Does the appraiser need anything from me in advance?   (Back to top)

The first step in most appraisals is the property 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 landscaping so we can be free to get an accurate measurement of exterior walls.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if readily available).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning 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"?   (Back 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?   (Back 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 report - it's usually included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these situations, the appraiser may define 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.


Are some home improvements more worthwhile than others?   (Back 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, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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, returning 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.

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