Peterson Appraisal Group has answers to "Frequently Asked Questions"

Peterson Appraisal Group is eager to reply to any concerns you might have about appraisals in Placer County. Contact Peterson Appraisal Group today to see how we can help you with your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to need 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 appraisal is done, how can I have assurance that the value conclusion is legitimate?
Who hires Peterson Appraisal Group
Where does an appraiser get the information used to estimate values in Placer 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?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



What is an appraisal?   (See list of FAQ's)

The process of producing an appraisal deals with an evaluation which forms an opinion of value. There are three "common approaches to value" which helps the real estate appraiser come to this opinion or estimate. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value. Another of the approaches is the Sales Comparison Approach - which involves making a comparison to other similar nearby properties which have recently sold. Being the most common approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a residential property. The Income Approach is generally used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

What does an appraiser do?   (See list of FAQ's)

An appraiser forumlates an impartial and well substantiated assessment of market value, to be used in making real estate transactions. Appraisers summarize their analysis in appraisal reports.


What would cause me to need your services?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for obtaining an report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax obligations.
  • To build a case for a homeowner's equity and remove PMI.
  • To fight high property taxes.
  • To settle an estate.
  • To provide you an edge when purchasing a home.
  • To determine a reasonable property value when putting your home on the market.
  • To protect 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 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 provide an opinion of value and do not do appraisal reports. A third-party home inspector will judge the structure of the house, from the top to the bottom. The usual home inspector's report will contain an evaluation of the integrity of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible 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)

Frankly, they have nothing in common. The CMA uses market trends to create most of their business. An appraisal utilizes comparable sales that can be verified by public record. Also, the appraisal verifies other factors like condition, neighborhood and construction costs. 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 doing the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.

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

Each report should demonstrate a supported value opinion and will document the following:
  • The client and other intended users.
  • 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 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 entailed in the activity of completing the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report


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

In communicating an appraisal report, each appraiser must make sure of the following:
  • That the information analysis contained in the appraisal was appropriate.

  • Whether individually or collectively, there were no substantial errors contained in the report, nor any material details left out.

  • That appraisal services were rendered in a careful and conscientious manner.

  • That a believable, supportable appraisal report was conferred.
There are rigorous education and on the job experience requirements that must be fulfilled in order to get an appraisal license in California. Plus, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Regulations regarding licensing and certification are different from state to state. However, licensing and certification typically translates to many hours of coursework, tests and experience working under a supervisory appraiser. Once an appraiser is licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Peterson Appraisal Group   (See list of FAQ's)

Mortgage lenders are an appraiser's most likely customer, requesting 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 information used to estimate values in Placer County or other areas?   (See list of FAQ's)

One of the primary things an appraiser does is to gather data. Data can be described as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is collected from a variety of places. To research recent sales to be used as "comps", an appraiser will typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, 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?   (See list of FAQ's)

An appraisal is a worthwhile whenever the value of your home is relevant to some financial decision. When selling your house, an appraisal assists you in setting 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 Peterson Appraisal Group is the best way to ensure assets are divided properly. Simply put, a house 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?   (See list of FAQ's)

PMI stands for Private Mortgage Insurance. This supplementary plan guards the lender in case a borrower is unable to pay on the loan and the market price of the house is less than what is owed on the loan. 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? Contact Peterson Appraisal Group today at 916-202-6401. You may be able to get rid of your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection   (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 amenities. Is there anything you can do to help? Yes there is! First, be sure the appraiser has easy access to the exterior of the house . Trim any bushes and move any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Title policy that describes encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A list of "suggested" improvements when the property is being appraised "as complete".

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."



Does the appraisal belong to the bank or the consumer?   (See list of FAQ's)

For mortgage transactions, the lender orders 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 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 situations, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.


How can I get the most ROI out of home improvements?   (See list of FAQ's)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

As a rule, the most value returned from renovating a home comes in the kitchen. One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment. Bathrooms weren't far behind, returning 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.