Kevin Lawrence has answers to "Frequently Asked Questions"

Kevin Lawrence is always eager to reply to any concerns you might have about appraisals in Poway and San Diego County. Feel free to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons someone would request a real estate appraisal?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
After completing the appraisal, what guarantee is there that the value indicated is accurate?
How hard is it to become certified?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in San Diego County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Describe an appraisal   (Top)

An appraisal is an investigation leading to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or valuation. One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach deals with searching for similar homes in close proximity and discovering the value based on comparing those properties to the home in question. Being the most commonly used approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Top)

An appraiser forumlates a professional, unbiased opinion of market value, in the support of real property exchanges. Appraisers present their professional investigation in appraisal reports.


What are the reasons someone would request a real estate appraisal?   (Top)

There are a lot of reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an report include:
  • If you are applying for a loan.
  • To reduce your tax burden.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To provide you a leg-up when purchasing real estate.
  • To find a likely price 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.
  • Government agencies such as the IRS require an appraisal on every home.
  • If you are ever involved in a lawsuit.
If you need more information regarding the appraisal process, please click here.


Is an appraisal the same as a home inspection?   (Top)

Appraisers do not do provide home inspections and are not home inspectors. An inspection is a third-party evaluation of the available structure and systems of a house, from the top to the bottom. The usual property inspector's report will contain an evaluation of the integrity 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.

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

To be blunt, it's like comparing broadband and dial-up. What the CMA relies upon are vague trends. An appraisal utilizes comparable sales that can be verified by records. Location and architectural costs are also important in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for assignments, regardless of their outcome.

What are the contents of an appraisal report?   (Top)

Every appraisal should indicate a credible value opinion and will clearly state the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.(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 characteristics, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible items.
  • All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work considered while working up the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what guarantee is there that the value indicated is accurate?   (Top)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • That the information analysis utilized in the appraisal was appropriate.

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

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

  • That a solid, defensible appraisal report was imparted.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to formulate an unbiased opinion. Plus, appraisers must abide by a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she is required to take continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who do appraisers work for?   (Top)

Mortgage lenders are an appraiser's most likely client, requesting their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

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

One of the primary things an appraiser does is to collect property data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a number of sources. Local Multiple Listing Services (MLS) provide 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 often need 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 assimilates general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

Why should I hire a licensed appraiser?   (Top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When 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. 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. 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 stands for Private Mortgage Insurance. It guards the lender in the event a borrower doesn't pay on the loan and the value of the home 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.

Has your real estate appreciated since you first purchased? Call Kevin Lawrence today at (858) 663-1676 to see if you can get rid of your Private Mortgage Insurance premium.

How do I get ready for the appraiser?   (Top)

We begin with an inspection of the property. 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 amenities. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any bushes and move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • Records on the latest purchase of the property in the last three years.
  • 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.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Brag sheet that lists 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 if the property is to be appraised "as complete".

How does an appraiser 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."

Does the appraisal belong to the bank or the consumer?   (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 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.

The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not noted otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price?   (Top)

The added value of a particular amenity truly depends on the local market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

As a rule, the best ROI 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 weren't far behind, returning 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.