Arizona Valleywide Appraisals, LLC has answers to "Frequently Asked Questions"

Arizona Valleywide Appraisals, LLC is always ready to reply to any concerns you might have about appraisals or real estate in Scottsdale and Maricopa County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would a person need services from Arizona Valleywide Appraisals, LLC?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What can I expect to see in my appraisal report?
Once the appraisal has been delivered, how can I have certainty that the value indicated is accurate?
How difficult is it to become certified?
Who hires an appraiser?
Where does Arizona Valleywide Appraisals, LLC get the data used to estimate values in Maricopa County or other areas?
Why do I need a professional appraisal?
My mortgage statement has an item on it for PMI? Can I get rid of that?
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?
Are some home improvements more worthwhile than others?



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

The appraisal process is an estimation that leads to an opinion of value. This opinion or estimate is figured by a formal process that typically uses three "common approaches to value". One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for comparable homes nearby and discerning value based on comparing those houses to the house being investigated. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a house. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the money produced by the property.

Describe what an appraiser does   (Go to list of  questions)

An appraiser forumlates a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers reveal the details of their professional conclusions in appraisal reports.


Why would a person need services from Arizona Valleywide Appraisals, LLC?   (Go to list of  questions)

There are many reasons to obtain an appraisal from Arizona Valleywide Appraisals, LLC with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
  • To receive a loan.
  • To reduce your tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To contest high property taxes.
  • If you need to take care of an estate.
  • To offer you a leg-up when purchasing real estate.
  • To determine an honest property value when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every house.
  • If you ever find yourself in a lawsuit.
For a more extensive explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party evaluation of the livable structure and systems of a property, from the top to the bottom. The stereotypical property inspector's report will contain an evaluation of the condition of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

Simply, they share nothing in common. The CMA utilizes market trends to conduct most of their business. An appraisal utilizes comparable sales that can be verified by records. The appraisal report will also include neighborhood and construction values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of the person creating the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. A certified, Arizona licensed professional who bases their livelihood on valuing real estate in and around Maricopa County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat sum for work they perform, regardless of their value conclusion.

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

The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • The client and other intended users.
  • The intended use of the report.
  • The purpose of the assignment.
  • The type of value reported and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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.
  • What was involved in the activity of completing the assignment.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been delivered, how can I have certainty that the value indicated is accurate?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must ensure the following:
  • That the information analysis implemented in the appraisal was suitable.

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

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

  • The final appraisal report was easy to explain, credible and not easily discredited.
To become a state licensed appraiser, there are intense education requirements as well as real world experience that must be attained. Plus, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Go to 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 coursework, tests and practical experience. Once an appraiser is licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires an appraiser?   (Go to list of  questions)

Mortgage lenders are an appraiser's most likely customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Arizona Valleywide Appraisals, LLC get the data used to estimate values in Maricopa County or other areas?   (Go to list of  questions)

Collecting information is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a numerous places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents. Appraisers often have to report when a property lies 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 gathers general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal?   (Go to list of  questions)

If you're making any kind of financial decision and the value of your home matters, you'll want a full appraisal. For those selling a home, you'll want to determine 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 house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

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. It takes care of the lender if a borrower defaults on the loan and the value of the home is less 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.

Does your monthly mortgage payment have a lineitem for PMI?Call Arizona Valleywide Appraisals, LLC today at 480.247.8024 or send us an e-mail. Documentation of your home's current value could save you thousands.

How do I get ready for the appraiser?   (Go to list of  questions)

The first step in most appraisals is the property inspection. 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 features. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any landscaping 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.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if available).
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill and or legal description of the property.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

How does an appraiser define "Market Value"?   (Go to list of  questions)

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."

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

This rule doesn't apply when a home owner hires an appraiser directly. In these situations, the appraiser may define the purpose of the appraisal; 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.

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

The answer to this is different depending upon the location of the home. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, yielding 85%. Adding bedrooms and baths can also help 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.