Berge Company Appraisers has answers to "Frequently Asked Questions"
Berge Company Appraisers is always prepared to handle any concerns you might have about appraisals or real estate in Alhambra and Los Angeles County.
Contact us today to see how we can help solve your valuation problems.
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An appraisal report is an evaluation allowing the appraiser to come to an opinion of value.
The real estate appraiser must use a several "approaches," typically three, to conclude the estimation of market value.
The Cost Approach is one of the approaches that appraisers use to find the value of a home; it involves figuring what the improvements would cost minus physical degradation, adding the land value.
Another of the processes is the Sales Comparison Approach - which deals with discovering a comparison to other similar properties within a close proximity which have recently sold.
Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a house.
One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to determine the market value of a property based on what an investor would pay based on the capital produced by the building.
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An appraiser generates an unbiased and well justified assessment of market value, often in the context of a real estate sale.
Appraisers demonstrate their professional investigation in appraisal reports.
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There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions.
A few other reasons for getting an appraisal include:
To get a loan.
If you would like to reduce your property tax obligations.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To fight inflated property taxes.
To handle an estate.
To give you an edge when purchasing a home.
To figure out a likely price when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
It's possible you could have to deal with being in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process involved in getting an appraisal.
Home inspectors do not provide an opinion of value and do not do appraisal reports.
The purpose of a home inspection is to evaluate the structure of the house from foundation to rooftop.
Usually, a home inspection report will discuss 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, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.
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Simply put, it's like comparing sugar and saccharin.
The CMA depends on indistinct local market trends.
Appraisals use similar sales which are verifiable resources.
Location and building values are also precedent in an appraisal.
The CMA will provide a non-specific figure.
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.
The person behind the report is frankly the biggest difference between a CMA and an appraisal.
Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation.
The appraisal is created 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 value conclusion, unlike the agent, whose income is tied to the value of the home.
Each report must indicate a credible estimate of value and must clearly state the following:
The client and other intended users.
The intended use of the appraisal.
The purpose of the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Relevant property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible items.
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 when completing the appraisal.
For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report
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In the documentation of an appraisal, each appraiser must ensure the following:
The appraisal contained a suitable analysis of the data.
Whether individually or collectively, there were no critical errors contained in the report, nor any relevant details left out.
That appraisal services were done in a careful and judicious manner.
The final appraisal report was transparent, sound and conclusive.
To become a state licensed appraiser, there are strenuous education requirements as well as practical experience that must be logged.
Plus, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).
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Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan.
Appraisers also provide opinions in litigation cases, tax matters and investment decisions.
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One of the primary tasks an appraiser performs is to collect property data.
Data can be classified as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.
General data is received from a number of sources.
To find out about recently sold homes to be used as "comps", we typically use the local Multiple Listing Service.
Tax records and other public documents verify actual sales prices in a market.
Appraisers often have to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.
And most importantly, the appraiser assembles general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.
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If you're making any kind of financial decision and the value of your home matters, you'll want to hire a licensed appraiser.
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.
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 home is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.
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PMI is short for for Private Mortgage Insurance.
PMI protects the lender if a borrower doesn't 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.
Is PMI a part of your monthly mortgage payment?Call Berge Company Appraisers today at (626) 282-1149 or send us an e-mail. A current appraisal could save you thousands.
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We begin with an inspection of the home.
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 the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, 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:
Information on any written private easements, such as a shared driveway with a neighbor.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
A bill for your most recent real estate taxes which should also contain a legal description of the property.
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In real estate appraising, Market Value (as opposed to Fair 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."
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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 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.
It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage.
In these cases, the appraiser may define how the appraisal can be used; 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.
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This really depends on where the home is.
For example,
installing an inline humidifier could be nice in arid regions, but completely useless near the coast!
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 were second, 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 overbuilt for your neighborhood in terms of size.
For real property valuation in Southern California, please call or email Berge Company Appraisers. At Berge Company Appraisers, we specialize, but are not limited to retrospective valuation (dates in the past) of single family residential, land, multi family residential and small income properties in Los Angeles and Orange Counties. We also cover portions of San Bernardino, San Diego, Riverside and Ventura counties. Please call, email us, or see our home page for the assignment & property types that we cover. Thank you for your interest!
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