Who actually owns the appraisal report?

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."

how does an appraiser define market value?

We begin 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. The best thing you can do to help is

make sure the appraiser has easy access to the exterior of the

house. Trim any shrubs and move any items that would get in

our way while we measure the structure. On the inside, make

sure we can get to items like furnaces and water heaters.


To help speed things along as well as ensure a more accurate

report, attempt if possible to have the following items:


•Any information on the purchase of the property for

the last three years.

•Information on any written private easements, 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.

•Home inspection reports, or other recent reports for

termites, EIFS (synthetic stucco) wall systems, septic

systems and wells.

•Any "Homeowners Associations" agreements or, if

applicable, condo agreements or fees.

My mortgage statement has an

item on it for PMI? Can I get rid of that?

PMI stands for Private Mortgage Insurance. PMI takes care of the

lender in case a borrower defaults on the loan and the market

price of the home is less 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.

How can a licensed appraiser help me?  

Mortgage lenders are an appraiser's typical client, requesting their

services to ensure real estate involved in a mortgage transaction is

adequate collateral for a loan. Appraisers also provide opinions for

legal settlements, tax matters and investment decisions. 

Who hires an appraiser?

In communicating an appraisal report, each appraiser must

ensure the following:


•That the information analysis contained in the appraisal

was proper.

•Whether individually or collectively, there were no grave

errors contained in the report, nor any relevant details

left out.

•That appraisal services were not carried out in a careless

or negligent fashion.

•That a trustworthy, supportable appraisal report

was communicated.


There are intense education and practical experience

requirements that must be satisfied in order to get an appraisal

license in California. Likewise, appraisers must abide by a strict

industry code of ethics and respect national standards of practice

for real estate appraisal. The guidelines for carrying out an

appraisal and documenting its results are insured by enforcement

of the Uniform Standards of Professional Appraisal Practice (USPAP).


Regulations regarding licensing and certification vary from state

to state. In general, licensing and certification typically translates

to many hours of coursework, tests and real world experience.

Once licensed, he or she is required to take continuing education

courses in order to keep the license up to date.

Each appraisal must reflect a supported value opinion and must

document the following:


•Who engaged the appraiser and whose purposes the

appraisal is to serve.

•How the appraisal is supposed to be used.

•The appraisal's purpose.

•The type of value reported and a definition of that value.

•The effective date of the appraisal.(Sometimes this is in

the past or maybe the future for new construction!)

•Pertinent property attributes, including: location, physical

attributes, legal attributes, economic factors, the real

property interest valued, and non-real estate items

included in the valuation, 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 the like.

•Division of interest, such as fractional interest, physical

segment and partial holding.

•What was involved in the activity of completing the job.

What's in an appraisal report?

Appraisals and comparative market analyses have nothing in

common. What the CMA relies upon are vague trends. Appraisals

use comparable sales which are valid resources. In addition, the

appraisal verifies other factors like condition, location and building

costs. The CMA will provide a non-specific figure. Delivering a

defensible and careful analysis, an appraisal will give a clear

opinion of value.


Who's behind the report is frankly the biggest difference between

a CMA and an appraisal. A CMA is created by a real estate agent

who may or may not have a true grasp of the market or valuation

concepts. A certified, state licensed professional who bases a

career on valuing homes in and around Los Angeles County is

behind the appraisal. Moreover, the appraiser is an independent

party, with no vested interest in the property's value, unlike the

agent, who gets a commission based upon the value of the home.

What is the difference between an appraisal

and a comparative market analysis (CMA)?

Appraisers do not do complete house inspections and are not

home inspectors. An inspection is a third-party evaluation of the

livable structure and appliances of a home, from the roof to the

foundation. Commonly, a home inspection report will explain the

amenities and the requirements of the house: air conditioning

(weather permitting), electrical services, the condition of the

heating system, the plumbing; then the structural integrity of the

home such as the attic, exposed insulation, walls, floors, ceilings,

windows, then the foundation, basement and visible structures.

How is an appraisal different

than a home inspection?

An appraiser produces an objective and well justified assessment

of market value, often in the context of a real estate exchange.

Appraisers summarize their professional investigation in

appraisal reports. 

Describe What An Appraiser Does

The procedure of performing an appraisal report deals with an

estimation which leads to an opinion of value. The real estate

appraiser must use a few "approaches," typically three, to draw up

the estimation of market value. One of them is the Cost Approach -

which is how much capital would be required to replace the

improvements, less physical deterioration and other factors, then

adding the land value. Easily the most common approach in

figuring the value of a house is the Sales Comparison Approach

which deals with making a comparison to comparable homes

nearby. Being the most common approach, the Sales Comparison

Approach tends to be the most precise and best indicator of

market value for a house. One of the least common approaches

in appraising residential properties is the Income Approach, which

is generally used to determine the market value of a property

based on what an investor would pay based on the capital

produced by the property.

Describe An Appraisal

Babros & Associates, LLC

Prosfessional Residential Appraisal

(310) 376-5887