Phoenix Valuations, LLC has answers to "Frequently Asked Questions"


	Phoenix Valuations, LLC is willing to answer any questions you might have about appraisals or real estate in Scottsdale and Maricopa County. Contact Phoenix Valuations, LLC today to learn how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons someone would need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Once the appraisal has been completed, what guarantee is there that the value indicated is accurate?
How hard is it to become certified?
Who hires an appraiser?
Where does Phoenix Valuations, LLC get the information used to estimate values in Maricopa County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What is "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 appraiser performs an estimation that generates an opinion of value. There are three "common approaches to value" which helps the appraiser come to this opinion or valuation. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Easily the most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which concerns figuring a comparison to similar homes nearby. Being the most commonly used approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a house. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the money produced by the property.

What does an appraiser do? (List of questions)

An appraiser produces an objective and well substantiated determination of market value, in the support of real property exchanges. Appraisers demonstrate their expert analysis in appraisal reports.

What are the reasons someone would need a real estate appraisal? (List of questions)

There are a lot of reasons to obtain an appraisal from Phoenix Valuations, LLC with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an report include:

To get a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To challenge inflated property taxes.
To settle an estate.
To offer you a leg-up when purchasing a home.
To figure out an honest sales price when listing your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
If you are ever involved in a civil case.

Click here for a more extensive explanation of the process about getting an appraisal.

What is the difference between an appraisal and 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 evaluate the structure of the home from foundation to top. The standard property inspector's report will contain an evaluation of the integrity of the house's heating system, 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? (List of questions)

To be blunt, it's like comparing opera to country. The CMA uses market trends to generate most of their business. The appraisal is based on specific proven comparable sales. Also, the appraisal checks other factors like condition, location and construction prices. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the largest differentiator is who's creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created 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 whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their outcome.

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

Every report should reflect a credible value opinion and will 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 appraisal.(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 characteristics, 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 involved in the activity of completing the job.

For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, what guarantee is there that the value indicated is accurate? (List of questions)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:

That the information analysis contained in the appraisal was proper.

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

That appraisal services were delivered in a careful and conscientious fashion.

That a trustworthy, substantiated appraisal report was communicated.

To become a state licensed appraiser, there are education requirements as well as real world experience that must be logged - all with the end goal of being able to render unbiased value opinions. Plus, appraisers must follow a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for developing an appraisal and reporting its results are guaranteed 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 commonly associated with many hours of coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she is required to complete 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 hired by mortgage lenders to estimate the value of a home involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Phoenix Valuations, LLC get the information used to estimate values in Maricopa County or other areas? (List of questions)

One of the primary tasks an appraiser must accomplish is to assimilate data. Data can be divided into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is gathered from a variety of sources. To find out about recently sold homes to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood service.

And last but not least, the appraiser assembles general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

Why should I hire a licensed appraiser? (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. 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, you can avoid overpaying by getting an independent appraisal. For those settling an estate or divorce, an appraisal from Phoenix Valuations, LLC is the best documentation to ensure assets are split up properly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

What exactly is PMI and how can I get rid of it? (List of questions)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional policy covers the lender in case a borrower is unable to pay on the loan and the market price of the property is lower than the loan balance. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.


	Has your home value appreciated since you first purchased? Call Phoenix Valuations, LLC today at 480.634.5980 to see if you can cancel your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal appointment (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 condition 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 get in our way while we measure the structure. Indoors, make sure the appraiser can easily access 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:

Information on the latest purchase of the property in the last three years.
List of personal property to be sold with the building.
Most recent real estate tax bill and or legal description of the property.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

What is "Market Value?" (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 bundled 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 scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not noted 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, 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 weren't far behind, returning 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.