Appraisal Reports and Services, LLC has answers to "Frequently Asked Questions"

Appraisal Reports and Services, LLC is eager to address any concerns you might have about appraisals or real estate in Maui County. Don't hesitate to contact us today.

Define the term "Appraisal"
Describe what an appraiser does
Why would I require a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
After completing the report, how can I have a guarantee that the value conclusion is accurate?
How difficult is it to become certified?
Who do appraisers work for?
Where does Appraisal Reports and Services, LLC get the information used to estimate values in Maui County or other areas?
How can a licensed appraiser help 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?
What does "Market Value" mean?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Define the term "Appraisal"   (List of questions)

An appraisal is an investigation that concludes with an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or valuation. The Cost Approach is one of the methods that real estate appraisers use to find the value of a home; it involves finding what the improvements would cost less physical depreciation, adding the land value. Another of the processes is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most common approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a home. One of the least common approaches in appraising homes is the Income Approach, which is commonly used to determine the value of a property based on what an investor would pay based on the income produced by the building.

Describe what an appraiser does   (List of questions)

An appraiser generates an objective and well justified determination of market value, often in the context of a real estate sale. Appraisers demonstrate their professional findings in appraisal reports.


Why would I require a real estate appraisal?   (List of questions)

There are a lot of reasons to obtain an appraisal from Appraisal Reports and Services, LLC with the most common reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To show a homeowner has 30% equity and remove PMI.
  • To challenge high property taxes.
  • If you need to take care of an estate.
  • To provide you an edge when purchasing real estate.
  • To find a reasonable sales price when putting your home on the market.
  • 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 are ever involved in a lawsuit.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraisal different than a home inspection?   (List of questions)

Home inspectors do not figure out an opinion of value and do not use the same forms as appraisers. The point of a home inspection is to investigate the structure of the home from bottom to rooftop. Commonly, a home inspection report will explain the amenities and the requirements of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Frankly, it's like comparing Shakespeare to reality TV. The CMA depends on indefinite local market trends. The appraisal is reliant on specific definite comparable sales. The appraisal report will also contain location and building prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is the person creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is produce by a licensed, certified professional who has made a career 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 outcome.

What are the contents of an appraisal report?   (List of questions)

The main point of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • Relevant property attributes, including: location, physical characteristics, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
  • 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 included 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

After completing the report, how can I have a guarantee that the value conclusion 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 suitable.

  • Whether individually or collectively, there were no crucial errors contained in the appraisal, nor any relevant details left out.

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

  • That a solid, defensible appraisal report was communicated.
To become a state licensed appraiser, we must fulfill extensive education and experience requirements that give us the background to produce an unbiased opinion. Plus, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (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 practical experience. Once licensed, he/she is required to engage in continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

Who do appraisers work for?   (List of questions)

Mortgage lenders are an appraiser's most likely customer, needing 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 Appraisal Reports and Services, LLC get the information used to estimate values in Maui County or other areas?   (List of questions)

Collecting information is one of the main things an appraiser does. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is received from a many places. To research recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we research items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

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.

How can a licensed appraiser help me?   (List of questions)

If you're involved in 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 figure out a 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. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is 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.

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

PMI stands for Private Mortgage Insurance. It guards the lender if a borrower doesn't pay on the loan and the market price of the house is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Has your real estate appreciated since you first purchased? Call Appraisal Reports and Services, LLC today at 8082693986. You may be able to cancel your Private Mortgage Insurance premium.

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

The first step in most appraisals is the home 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 condition of its amenities. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Brag sheet that lists major home improvements and upgrades, 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 bill for your most recent real estate taxes which should also contain a legal description of the property.

What does "Market Value" mean?   (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?   (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 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 situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

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

The added value of a particular amenity truly depends on the local market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also increase the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.