Valuation Concepts, LLC has answers to "Frequently Asked Questions"


	Valuation Concepts, LLC is always prepared to reply to any questions you might have about appraisals or real estate in Los Angeles County. Contact Valuation Concepts, LLC today to talk about how we can help you with your specific valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would I need services from Valuation Concepts, LLC?
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?
Once the assignment has been completed, what assurance is there that the final number is accurate?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does Valuation Concepts, LLC get the information used to estimate values in Los Angeles County or other areas?
Why should I hire a licensed appraiser?
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
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (List of questions)

The process of performing an appraisal consists of an investigation which forms an opinion of value. This opinion or estimate is discerned through a formal process that usually uses three "common approaches to value". One of them 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. Another of the methods is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close vicinity which have recently sold. The Sales Comparison Approach is commonly the most definitive and clearest indicator of value for a residence. 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 capital produced by the property.

Describe what an appraiser does (List of questions)

An appraiser provides a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers reveal the details of their investigation in appraisal reports.

Why would I need services from Valuation Concepts, LLC? (List of questions)

There are a lot of reasons to get an appraisal from Valuation Concepts, LLC with the most common reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:

If you are applying for a loan.
If you would like to reduce your property tax burden.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To contest inflated property taxes.
To deal with an estate.
To offer you a negotiating tool when purchasing a home.
To figure out the most probable property value when listing your home.
To defend 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 property.
If you ever find yourself in a civil case.

If you need more information regarding the appraisal process, please click here.

Is an appraisal the same as a home inspection? (List of questions)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. The point of a home inspection is to evaluate the structure of the house from basement to rooftop. Commonly, a home inspection report will explain the amenities and the necessities of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Simply, they have nothing in common. What the CMA relies upon are superficial trends. Appraisals use similar sales which are valid resources. The appraisal report will also include neighborhood and building costs. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is who's doing the report. Real estate agents produce CMA's, and they don't always know the whole market or bear 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. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for work they perform, regardless of their value conclusion.

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

Every appraisal should indicate a supported estimate of value and must document the following:

The client and other intended users.
The intended use of the appraisal.
The appraisal's purpose.
The type of value contained and a definition of that value.
The effective date of the appraiser's opinions and conclusions.
Relevant property attributes, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
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 when completing the appraisal.

For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, what assurance is there that the final number is accurate? (List of questions)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used an appropriate analysis of the information.

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

That appraisal services were not carried out in a careless or negligent fashion.

The final appraisal report was understandable, legitimate and conclusive.

There are rigorous education and practical experience requirements that must be met in order to get an appraisal license in California. In addition, appraisers must abide by a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(List of questions) Licensing and certification requires coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he or she must then engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers? (List of questions)

Typically, appraisers are hired by mortgage lenders to estimate the value of property involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Valuation Concepts, LLC get the information used to estimate values in Los Angeles County or other areas? (List of questions)

Compiling information is one of the primary occupations of an appraiser. 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 documented by the appraiser during an inspection.

General data is gathered from a numerous places. To research recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. 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 service.

And most importantly, the appraiser assimilates general data from his or her past experience in doing assignments for other houses in the same market.

Why should I hire a licensed appraiser? (List of questions)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're selling your house, an appraisal helps you set the most appropriate price. 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 is essential to making the right financial decisions.

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

PMI is the common abbreviation for for Private Mortgage Insurance. This supplemental plan takes care of the lender in case a borrower doesn't pay on the loan and the value of the house is lower than what is owed on 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 home value appreciated since you first purchased? Contact Valuation Concepts, LLC today at 877-466-9817. You may be able to get rid of your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment (List of questions)

We start with an inspection of the property. During this process, we 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. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to 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:

Written property agreements, such as a maintenance easement for a shared driveway.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
Most recent real estate tax bill from Los Angeles and or legal description of the property.

How does an appraiser define "Market Value"? (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? (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 appraisal - 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.

This rule doesn't apply when a home owner engages an appraiser directly. 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 stated otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements? (List of questions)

The answer to this is different depending upon the location of the home. For example, putting in 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. 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, returning 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.