Absolute Real Estate Appraisal has answers to "Frequently Asked Questions"


	Absolute Real Estate Appraisal is ready to handle any concerns you might have about appraisals or real estate in El Paso and El Paso County. Contact us today to learn how we can help solve your specific valuation problems.

What is an appraisal?
What does an appraiser do?
Why would a person request your services?
How is an appraisal different than 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 is done, how can I have a guarantee that the value conclusion is legitimate?
How hard is it to become certified?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in El Paso County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (List of questions)

An appraiser provides an evaluation that leads to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the methods is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves searching for similar homes in close proximity and figuring out the value based on making a comparison of those homes to the property being appraised. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.

What does an appraiser do? (List of questions)

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

Why would a person request your services? (List of questions)

There are a lot of reasons to get an appraisal from Absolute Real Estate Appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:

To get a loan.
To lower your property taxes.
To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
To contest improperly assessed property taxes.
If you need to settle an estate.
To give you a leg-up when purchasing real estate.
To figure out the most probable price when selling your home.
To ensure parties are provided just compensation in eminient domain cases.
Because a government agency such as the IRS requires it.
If you ever find yourself in a lawsuit.

Click here for a more detailed explanation of the process about getting an appraisal.

How is an appraisal different than a home inspection? (List of questions)

Appraisers do not do provide house inspections and are not home inspectors. The point of a home inspection is to evaluate the structure of the property from basement to rooftop. Usually, a home inspection report will evaluate the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, 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 other visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)? (List of questions)

Honestly, they have nothing in common. The CMA relies on indefinite local market trends. The appraisal depends on similar valid comparable sales. The appraisal report will also contain neighborhood and construction prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person doing 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, Texas licensed professional who made their livelihood on valuing properties in and around El Paso County creates the appraisal. Further, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.

What's in an appraisal report? (List of questions)

The main purpose 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:

The client 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 appraiser's opinions and conclusions.(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 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 factors.
All 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 detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the assignment is done, how can I have a guarantee that the value conclusion is legitimate? (List of questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

That the information analysis contained in the appraisal was proper.

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

That appraisal services were delivered in a careful and judicious manner.

The final appraisal report was transparent, credible and conclusive.

There are rigorous classroom and practical experience requirements that must be adhered to in order to achieve the designation of "licensed appraiser" in Texas. In addition, appraisers must follow a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is commonly associated with many hours of classroom study, tests and experience working under a supervisory appraiser. Once licensed, he/she must then engage in 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? (List of questions)

Most of the time, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does an appraiser get the information used to estimate values in El Paso County or other areas? (List of questions)

Gathering data is one of the primary activities of an appraiser. Data can be described as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is collected from a variety of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

How can a licensed appraiser help me? (List of questions)

An appraisal is a valuable tool whenever your home's value is pertinent to a financial decision. If you're selling your home, an appraisal assists you in setting 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. Without knowing its real value, wise financial decisions are impossible.

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

PMI is short for for Private Mortgage Insurance. This added policy guards the lender in case a borrower doesn't pay on the loan and the market price of the house is less than the loan balance. 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.


	The amount you keep from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than Absolute Real Estate Appraisal when it comes to analyzing real estate appreciation in El Paso and El Paso County. Contact us today.

Does the appraiser need anything from the homeowner in advance? (List of questions)

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. Inside, 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.

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

A plot plan or survey of the house and land (if available).
A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A list of "proposed" improvements if the property is to be appraised "as complete".

Define "Market Value" (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? (List of questions)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is certainly entitled to a copy of the report - 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 cases, 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.

How can I get the most ROI out of home improvements? (List of questions)

Like all things real estate, this is dependent on a home's location. 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

As a rule, the most value returned from renovating a home comes in the kitchen. 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 are right up there with kitchens, yielding 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.