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Absolute Certified Appraisals, LLC has answers to "Frequently Asked Questions"

Absolute Certified Appraisals, LLC is always eager to elaborate on any concerns you might have about appraisals in Loveland and Larimer County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would someone need services from Absolute Certified Appraisals, LLC?
How is an appraisal different than a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Once the report has been delivered, what assurance is there that the value indicated is accurate?
What are the requirements to be a certified appraiser?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Larimer County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Describe an appraisal   (See list of FAQ's)

An appraiser performs an estimation that generates an opinion of value. There are three "common approaches to value" which helps the appraiser arrive at this opinion or valuation. One of the processes in use is the Cost Approach, which finds what it would cost to replace the improvements to the property, less the depreciation and physical dilapidation, adding the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which concerns figuring a comparison to comparable properties nearby. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to figure the market value of a property based on what an investor would pay based on the capital produced by the property.

Describe what an appraiser does   (See list of FAQ's)

An appraiser provides an objective and well justified opinion of market value, to be used in making real estate transactions. Appraisers show their expert analysis in appraisal reports.

Why would someone need services from Absolute Certified Appraisals, LLC?   (See list of FAQ's)

There are many reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
  • To receive a loan.
  • If you would like to reduce your property tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To challenge high property taxes.
  • To settle an estate.
  • To give you a negotiating tool when purchasing a home.
  • To figure out a reasonable sales 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 need an appraisal on every property.
  • If you are ever involved in a civil case.
Click here for a more detailed explanation of the process involved in getting an appraisal.

How is an appraisal different than a home inspection?   (See list of FAQ's)

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 home from bottom to attic. Generally, a home inspection report will discuss the amenities and the requirements of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Simply put, it's like comparing sugar and saccharin. The CMA uses market trends to create most of their business. An appraisal relies on comparable sales that can be verified by records. Location and architectural prices are also important in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's creating the report is frankly the biggest 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, Colorado licensed professional who bases their livelihood on valuing properties in and around Larimer County creates the appraisal. Moreover, the appraiser is an unbiased party, with no vested interest in the value conclusion, unlike the real estate agent, who gets a commission based upon the price of the home.

What's in an appraisal report?   (See list of FAQ's)

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:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the appraisal.
  • The type of value contained and a definition of the value reported.
  • 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 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 other items of a similar nature.
  • 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 the work that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been delivered, what assurance is there that the value indicated is accurate?   (See list of FAQ's)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal contained an appropriate analysis of the information.

  • 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 cognizant fashion.

  • The final appraisal report was easy to explain, legitimate and not easily discredited.
To become a state licensed appraiser, we must fulfill extensive education and experience requirements that enable us to produce an unbiased opinion. In addition, appraisers must follow a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (See list of FAQ's) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she is required to take continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who employs appraisers?   (See list of FAQ's)

Commonly, appraisers are hired by mortgage lenders to estimate the value of a home involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Larimer County or other areas?   (See list of FAQ's)

Gathering data is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is received from a variety of sources. Local Multiple Listing Services (MLS) have 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. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

Why do I need a professional appraisal?   (See list of FAQ's)

An appraisal is a valuable tool anytime the value of your home is pertinent to a financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Absolute Certified Appraisals, LLC is the best documentation to ensure assets are divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it?   (See list of FAQ's)

PMI stands for Private Mortgage Insurance. This added policy covers 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. 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 lineitem in your monthly mortgage payment?Call Absolute Certified Appraisals, LLC today at 970.663.1267 or send us an e-mail. Documentation of your home's present value could save you thousands.

How do I get ready for the appraiser?   (See list of FAQ's)

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 amenities. 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 landscaping and relocate any items that would get in our way while we measure the structure. Indoors, make sure we 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 agreement for a shared driveway.
  • Title policy that lists encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

Define "Market Value"   (See list of FAQ's)

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?   (See list of FAQ's)

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 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.

The exception to this rule is when a home owner engages an appraiser directly. In these scenarios, 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.

Which home renovations add the most to the price?   (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. 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 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 atypical for your neighborhood in terms of size.