Maxwell Appraisal Services has answers to "Frequently Asked Questions"

Maxwell Appraisal Services is always eager to address any inquiries you might have about appraisals or real estate in Poway and San Diego County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
What are the reasons I would require services from Maxwell Appraisal Services?
What is the difference between an appraisal and 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 appraisal has been delivered, what guarantee is there that the value indicated is trustworthy?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in San Diego 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"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



Define the term "Appraisal"   (Top)

An appraisal is an investigation that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. The Cost Approach is one of the processes that appraisers use to find the value of a home; it involves concluding what the improvements would cost without physical deterioration, plus the land value. Easily the most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which concerns figuring a comparison to comparable properties nearby. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The Income Approach is primarily 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?   (Top)

An appraiser generates a fair and credible opinion of market value, often in the context of a real estate sale. Appraisers reveal the details of their conclusions in appraisal reports.


What are the reasons I would require services from Maxwell Appraisal Services?   (Top)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To contest high property taxes.
  • If you need to settle an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To determine a likely property value 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 need an appraisal on every house.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
If you need a more detailed explanation of the appraisal process, please click here.


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

The appraiser is not a home inspector and does not do a complete home inspection. A third-party home inspector will investigate the structure of the property, from the top to the bottom. The standard home inspector's report will include an evaluation of the condition of the home's heating systems, 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.

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

To be honest, they have nothing in common. The CMA uses market trends to conduct most of their business. An appraisal utilizes comparable sales that can be validated by records. Also, the appraisal verifies other factors like condition, area and building prices. The CMA will provide a non-specific 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 biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the value of the home.

What can I expect to see in my appraisal report?   (Top)

Every appraisal should reflect a believable estimate of value and will identify 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.
  • The type of value reported and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.
  • Pertinent property characteristics, 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, trade fixtures and even intangible considerations.
  • 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.
  • What was involved in the activity of completing the assignment.
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been delivered, what guarantee is there that the value indicated is trustworthy?   (Top)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal contained a suitable analysis of the data.

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

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

  • That a credible, defensible appraisal report was conferred.
To become a state licensed appraiser, there are strenuous education requirements as well as practical experience that must be attained - all with the end goal of gaining the skills required to provide unbiased value opinions. In addition, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or she is required to complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who employs appraisers?   (Top)

Commonly, appraisers are called upon by lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in San Diego County or other areas?   (Top)

Compiling information is one of the primary tasks an appraiser performs. Data can be divided into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is gathered from a many sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.

And most importantly, the appraiser gathers 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?   (Top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from Maxwell Appraisal Services is the best way to ensure assets are split up properly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


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

PMI is short for for Private Mortgage Insurance. This additional plan covers the lender if a borrower defaults on the loan and the market price of the property is lower than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The amount you keep from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Maxwell Appraisal Services is a name you can trust when it comes to real estate value trends in Poway and San Diego County. Contact us today.

Does the appraiser need anything from the homeowner in advance?   (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. The best thing you can do to help is make sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Any records on the purchase of the property for the last three years.
  • List of personal property to be sold with the building.
  • Most recent real estate tax bill and or legal description of the property.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "Market Value"   (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 has rights to the appraisal report?   (Top)

In most real estate transactions, the appraisal is ordered by the lender. 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 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 cases, 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?   (Top)

The answer to this is different depending upon the location of the home. 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 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.