Columbia Appraisal Group, Inc. has answers to "Frequently Asked Questions"

Columbia Appraisal Group, Inc. is always willing to handle any questions you might have about appraisals in Vancouver and Clark County. Contact us today to learn how we can help you with your valuation problems.

What is an appraisal?
Describe what an appraiser does
What would cause me to require your services?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
After completing the appraisal, what guarantee is there that the final number is valid?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does Columbia Appraisal Group, Inc. get the data used to estimate values in Clark County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?

What is an appraisal?   (Go to list of  questions)

The procedure of creating an appraisal report deals with an inspection which forms an opinion of value. The appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the three is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach involves finding comparable houses nearby and discerning value based on making a comparison of those homes to the home in question. The Sales Comparison Approach is commonly the most accurate and clearest indicator of 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   (Go to list of  questions)

An appraiser produces an unprejudiced and well supported assessment of market value, to be used in making real estate transactions. Appraisers present their findings in appraisal reports.

What would cause me to require your services?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
  • To obtain a loan.
  • If you would like to lower your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
  • To fight high property taxes.
  • If you need to take care of an estate.
  • To offer you an edge when purchasing a home.
  • To determine 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 house.
  • If you ever find yourself in a civil case.
For a more extensive description of the appraisal process click here.

Is an appraisal the same as a home inspection?   (Go to list of  questions)

Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party investigation of the livable structure and mechanical systems of a property, from the top to the bottom. Usually, a home inspection report will evaluate the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Go to list of  questions)

Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on indefinite trends in the market. An appraisal is based on comparable sales that can be validated by records. In addition, the appraisal verifies other factors like condition, neighborhood and building prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is hands down the most significant difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who has formed a career on valuing properties in and around Clark County is behind the appraisal. Further, the appraiser is an unbiased voice, with no conditional interest in the property's value, unlike the real estate agent, who gets a commission based upon the value of the home.

What can I expect to see in my appraisal report?   (Go to list of  questions)

The main point of an appraisal report is to give a value opinion, and depending on the scope of the report, one will customarily see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • 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 characteristics, 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 items.
  • Any 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 used when completing the appraisal.
For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what guarantee is there that the final number is valid?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • That the information analysis contained in the appraisal was suitable.

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

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

  • The final appraisal report was clear, credible and defensible.
There are rigorous education and experience requirements that must be adhered to in order to achieve the designation of "licensed appraiser" in Washington. In addition, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (Go to list of  questions) Licensing and certification takes classroom study, tests and real world experience. Once an appraiser is 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?   (Go to list of  questions)

Most of the time, appraisers are hired by lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does Columbia Appraisal Group, Inc. get the data used to estimate values in Clark County or other areas?   (Go to list of  questions)

One of the most important activities of an appraiser is to compile data. Data can be classified as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.

How can a licensed appraiser help me?   (Go to list of  questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're selling your home, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A home is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI is an acronym for Private Mortgage Insurance. PMI covers the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on the loan. 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.

Does your monthly mortgage payment include a fee for PMI?Call Columbia Appraisal Group, Inc. today at 360-567-2208 or send us an e-mail. A current appraisal could save you thousands.

Should I do anything in advance of the appraisal appointment   (Go to list of  questions)

We start with an inspection of the home. 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. On the home's interior, pick up any clutter and make sure we can get to 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.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • A survey or plot map of the property and building (if available).
  • Written property agreements, such as a maintenance agreement 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, 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".

What is "Market Value?"   (Go to 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."

Who has rights to the appraisal report?   (Go to list of  questions)

In most real estate transactions, the appraisal is ordered by the lender. 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 entitled to a copy of the report - it's usually bundled with all the other closing documents - but is not entitled 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 scenarios, 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.

Are some home improvements more worthwhile than others?   (Go to list of  questions)

It really depends on the market. 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 move. 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.