Valley Appraisals, Inc has answers to "Frequently Asked Questions"

Valley Appraisals, Inc is always willing to address any concerns you might have about appraisals in Pitkin County. Contact us today to learn how we can help solve your valuation problems.

Describe an appraisal
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the assignment is done, how can I have assurance that the final number is accurate?
How are appraisers certified?
Who hires an appraiser?
Where does Valley Appraisals, Inc get the information used to estimate values in Pitkin County or other areas?
What can a full appraisal do for me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (List of questions)

An appraisal report is an investigation that concludes with an opinion of value. This opinion or estimate is arrived at through the use of a formal method that typically uses the three main "common approaches to value". One of the processes is the Cost Approach - which is what it would cost to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves searching for comparable houses in the vicinity and discovering the value based on making a comparison of those properties to the home in question. The Sales Comparison Approach is normally the most definitive and clearest indicator of value for a residence. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.

What does an appraiser do?   (List of questions)

An appraiser forumlates an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers show their expert investigation in appraisal reports.


What would cause me to need a real estate appraisal?   (List of questions)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To show a homeowner has 30% equity and remove insurance.
  • To challenge high property taxes.
  • If you need to settle an estate.
  • To provide you an edge when purchasing real estate.
  • To find a reasonable price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you are ever involved in a lawsuit.
Click here for a more extensive explanation of the process involved in getting an appraisal.


How is an appraiser different than a home inspector?   (List of questions)

Home inspectors do not figure out an opinion of value and do not do appraisal reports. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a house, from the top to the foundation. The usual house inspector's report will include an evaluation of the condition of the property's heating systems, 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.

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

Honestly, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal relies on specific proven comparable sales. Location and construction costs 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.

But the largest differentiator is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Colorado licensed professional who made a career on valuing properties in and around Pitkin County creates the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the value of a home, 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?   (List of questions)

Each report must reflect a believable value opinion and must document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The reason for the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical attributes, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, trade fixtures and even intangible factors.
  • Any 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.
  • What was entailed in the process of completing the assignment.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment is done, how can I have assurance that the final number is accurate?   (List of questions)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • That the information analysis utilized in the appraisal was proper.

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

  • That appraisal services were done in a careful and cognizant manner.

  • The final appraisal report was clear, sound and conclusive.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to produce an unbiased opinion. Plus, appraisers must abide by a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting 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 practical experience. Once an appraiser is licensed, he or she must then take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires an appraiser?   (List of questions)

Most of the time, appraisers are employed by lenders to estimate the value of a home involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Valley Appraisals, Inc get the information used to estimate values in Pitkin County or other areas?   (List of questions)

Gathering data is one of the main tasks an appraiser does. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

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


What can a full appraisal do for me?   (List of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal helps you set a price that maximizes profit and reduces time on the market. When buying, be sure you're not overpaying by commissioning an independent appraisal. 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?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. This added policy guards the lender in case a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The savings from getting rid of the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than Valley Appraisals, Inc when it comes to analyzing real estate appreciation in Snowmass and Pitkin County. Contact us today.

How do I get ready for the appraiser?   (List of questions)

We start 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 features. 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 shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • Any records on the purchase of the property for the last three years.
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • A list of any major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

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."



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

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 included 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 engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may stipulate 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.


I want to get more for my house. Where should I spend money renovating?   (List of questions)

This really depends on where the home is. 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 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 were second, yielding 85%. Adding bedrooms and baths can also boost 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.