Slater Real Estate Services, llc has answers to "Frequently Asked Questions"

Slater Real Estate Services, llc is always ready to reply to any inquiries you might have about appraisals or real estate in Weld County. Contact us today to talk about how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
Why would someone need your services?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
Upon completion of the appraisal, how can I have confidence that the value conclusion is trustworthy?
How are appraisers certified?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Weld 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?
How does an appraiser define "Market Value"?
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

What is an appraisal?   (List of questions)

An appraisal report is an investigation leading to an opinion of value. This opinion or estimate is arrived at by using a formal method that typically uses the three main "common approaches to value". One of the methods is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding similar houses nearby and figuring out the value based on comparing those homes to the home in question. The Sales Comparison Approach is normally the most accurate and clearest indicator of value for a residential property. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the market value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do?   (List of questions)

An appraiser offers a professional, unbiased assessment of market value, often in the context of a real estate sale. Appraisers illustate their expert findings in appraisal reports.

Why would someone need your services?   (List of questions)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for ordering an appraisal report include:
  • If you are applying for a loan.
  • To lower your property taxes.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To contest inflated property taxes.
  • If you need to take care of an estate.
  • To offer you a negotiating tool when purchasing real estate.
  • To figure out the most probable property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
Click here for a more detailed explanation of the process dealing with getting an appraisal.

Is an appraisal the same as a home inspection?   (List of questions)

The appraiser is not a home inspector and does not do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the house from basement to top. For the most part, a home inspection report will explain the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (List of questions)

Frankly, they have nothing in common. The CMA utilizes market trends to generate most of their business. Appraisals use comparable sales which are verifiable resources. Area and building values are also important in an appraisal. 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 who's creating the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. A certified, Colorado licensed professional who has formed their livelihood on valuing homes in and around Weld County creates the appraisal. 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 assignments, regardless of their value conclusion.

What does the appraisal report contain?   (List of questions)

The main objective of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The purpose of the assignment.
  • The type of value reported and a definition of that value.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property characteristics, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
  • 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 involved in the activity of completing the assignment.
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, how can I have confidence that the value conclusion is trustworthy?   (List of questions)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal used a suitable analysis of the data.

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

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

  • That a credible, supportable appraisal report was imparted.
There are rigorous education and on the job experience requirements that must be satisfied in order to achieve the title of "licensed appraiser" in Colorado. In addition, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

   (List of questions) Licensing and certification takes classroom study, tests and practical experience. Once licensed, he/she must then take continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (List of questions)

Mortgage lenders are an appraiser's typical customer, using their services to ensure a home 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 Weld County or other areas?   (List of questions)

Gathering data is one of the primary occupations of an appraiser. Data can be described as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.

Why do I need a professional appraisal?   (List of questions)

An appraisal is a worthwhile whenever your home's value is relevant to some financial decision. When selling your home, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Slater Real Estate Services, llc is the best way to ensure assets are divided evenly. A home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

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. PMI protects the lender in case a borrower defaults on the loan and the market price of the property 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.

Is PMI a part of your monthly mortgage payment?Call Slater Real Estate Services, llc today at 970-227-3600 or send us an e-mail. Documentation of your home's current value could save you thousands.

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

The first step in most appraisals is the property inspection. During this process, the appraiser 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 (gates aren't locked, etc). Trim any landscaping and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • Most recent real estate tax bill and or legal description of the property.

How does an appraiser define "Market Value"?   (List of questions)

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."

Once complete, who actually owns the appraisal report?   (List of questions)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. 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.

This rule doesn't apply when a home owner engages an appraiser directly. 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 stipulated otherwise, the home owner can do whatever they want with the appraisal.

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

It really depends on the 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 best ROI 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 were second, 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.