Handy & Associates has answers to "Frequently Asked Questions"

Handy & Associates is always happy to address any questions you might have about appraisals in Danville and Contra Costa County. Contact us today to see how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
Why would a person request your services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Upon completion of the appraisal, what guarantee is there that the value indicated is trustworthy?
What goes into an appraiser's certification?
Who do appraisers work for?
Where does an appraiser get the information used to estimate values in Contra Costa 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?
What does "Market Value" mean?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Go to list of  questions)

The procedure of creating an appraisal report consists of an estimation which leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the methods that appraisers use to find the value of a home; it involves discerning what the improvements would cost without physical degradation, plus the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which involves figuring a comparison to comparable houses nearby. The Sales Comparison Approach is normally the most definitive and best indicator of value for a residence. The Income Approach is primarily used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (Go to list of  questions)

An appraiser forumlates an objective and well supported opinion of market value, often in the context of a real estate purchase. Appraisers show their professional investigation in appraisal reports.


Why would a person request your services?   (Go to list of  questions)

There are many reasons to obtain an appraisal from Handy & Associates with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge improperly assessed property taxes.
  • If you need to take care of an estate.
  • To provide you an edge when purchasing real estate.
  • To figure out a reasonable price when selling real estate.
  • 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 house.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process dealing with getting an appraisal.


Is an appraisal the same as a home inspection?   (Go to list of  questions)

The appraiser is not a home inspector and he or she does not do a complete home inspection. The point of a home inspection is to evaluate the structure of the home from bottom to top. The usual house inspector's report will include an evaluation of the integrity 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.

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

Frankly, they share nothing in common. What the CMA depends on are superficial trends. An appraisal is based on comparable sales that can be verified by records. The appraisal report will also include area and building costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the most significant factor is who's doing the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent voice, with no vested interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

What's in an appraisal report?   (Go to list of  questions)

Every report must demonstrate a credible estimate of value and should identify the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, 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.
  • The scope of work used to complete the job.
For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, what guarantee is there that the value indicated is trustworthy?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained a suitable analysis of the data.

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

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

  • That a trustworthy, defensible appraisal report was communicated.
To become a state licensed appraiser, we must fulfill intense education and experience requirements that prepare us to formulate an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for developing an appraisal and communicating its results are insured 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 are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and real world experience. Once an appraiser is licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (Go to list of  questions)

Mortgage lenders are an appraiser's typical client, needing their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the information used to estimate values in Contra Costa County or other areas?   (Go to list of  questions)

One of the most important things an appraiser does is to collect data. Data can be described as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a number of sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we use tax records and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

And last but not least, the appraiser assimilates general data from his or her past experience in creating appraisals 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. If you're selling your home, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Handy & Associates is the best way to ensure assets are divided evenly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value means you can make smart financial decisions.

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

PMI is short for for Private Mortgage Insurance. It takes care of the lender in case a borrower is unable to pay on the loan and the value of the home 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.

Did you have less than 20% to put down on your mortgage? Call Handy & Associates today at (925) 837-5400. You may be able to get rid of your Private Mortgage Insurance payment.

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

We begin with an inspection of the home. 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. On the home's interior, pick up any clutter and make sure we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

To help speed things along as well as ensure a more accurate report, attempt if possible to have the following items:
  • A plot plan or survey of the house and land (if available).
  • List of personal property to be sold with the building.
  • Title policy that describes encroachments or easements.
  • A list of any major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (Go to list of  questions)

In real estate appraising, 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?   (Go to 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 certainly entitled to a copy of the report - 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.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. 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 noted otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price?   (Go to list of  questions)

The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 weren't far behind, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.