Radius Appraisal has answers to "Frequently Asked Questions"


	Radius Appraisal is always happy to elaborate on any questions you might have about appraisals or real estate in Ada County. Contact Radius Appraisal today to learn how we can help you with your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons someone would require your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the assignment is done, how can I have assurance that the value conclusion is trustworthy?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Ada County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (See list of FAQ's)

An appraisal report is a thought process that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. One of the processes is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, then adding the land value. The most common approach in figuring the likely sales price of a house is the Sales Comparison Approach which involves figuring a comparison to similar homes close by. Being the most common approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a home. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the income generated by the property.

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

An appraiser generates a professional, unbiased assessment of market value, often in the context of a real estate purchase. Appraisers reveal the details of their expert conclusions in appraisal reports.

What are the reasons someone would require your services? (See list of FAQ's)

There are a lot of reasons to order an appraisal from Radius Appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:

If you are applying for a loan.
To reduce your tax burden.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To fight inflated property taxes.
To deal with an estate.
To offer you an edge when purchasing a home.
To figure out a likely sales price when selling your home.
To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
Because a government agency such as the IRS requires it.
If you ever find yourself in a civil case.

If you need a more detailed explanation of the appraisal process, please click here.

What is the difference between an appraisal and a home inspection? (See list of FAQ's)

Home inspectors do not produce an opinion of value and are not appraisers. An inspection is a third-party investigation of the accessible structure and systems of a home, from the roof to the foundation. The general house inspector's report will include an evaluation of the integrity of the house'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.

Is an appraisal the same as a comparative market analysis(CMA)? (See list of FAQ's)

Honestly, they share nothing in common. What the CMA depends on are superficial trends. An appraisal utilizes comparable sales that can be validated by public record. Location and construction 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.

But the biggest difference is who's creating the report. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is created by a licensed, certified professional who makes a living 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 flat fee for work they perform, regardless of their outcome.

What does the appraisal report contain? (See list of FAQ's)

Every report should indicate a supported estimate of value and must document the following:

The client 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 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 attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations 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 entailed in the process of completing the job.

For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report

Once the assignment is done, how can I have assurance that the value conclusion is trustworthy? (See list of FAQ's)

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

That the information analysis implemented in the appraisal was proper.

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

That appraisal services were done in a careful and judicious fashion.

The final appraisal report was clear, credible and not easily discredited.

To become a state licensed appraiser, there are extensive education requirements as well as practical experience that must be attained - all with the objective of being able to provide unbiased value opinions. Plus, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(See list of FAQ's) Licensing and certification requires classroom study, tests and real world experience. Once licensed, he/she is required to engage in continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who engages the services of appraisers? (See list of FAQ's)

Mortgage lenders are an appraiser's typical client, requesting their services to ensure property involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

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

General data is gathered from a numerous places. To research recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. 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 product.

And most importantly, the appraiser assimilates general data from his or her past experience in creating appraisals for other houses in the same market.

Why should I hire a licensed appraiser? (See list of FAQ's)

If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Radius Appraisal is the best documentation to ensure assets are split up fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.

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

PMI stands for Private Mortgage Insurance. This supplemental plan guards the lender in the event a borrower doesn't pay on the loan and the value of the property is less 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.


	The money you keep from cancelling the PMI required when you got your mortgage will make up for the cost of the appraisal in a matter of months. Radius Appraisal is in the business of tracking real estate value trends in Boise and Ada County. Contact us today.

Does the appraiser need anything from me in advance? (See list of FAQ's)

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 features. Inside, pick up any clutter and make sure we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

A survey or plot map of the property and building (if readily available).
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.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

How does an appraiser 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."

Who has rights to the appraisal report? (See list of FAQ's)

For mortgage transactions, the lender orders 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 report - 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 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? (See list of FAQ's)

The answer to this is different depending upon the location of the home. 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.

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 were second, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.