Alan Harvey has answers to "Frequently Asked Questions"


	Alan Harvey is more than happy to elaborate on any inquiries you might have about appraisals or real estate in King County. Contact us today to talk about how we can help solve your valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would request your services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Once the appraisal is done, how can I have confidence that the final number is veritable?
How hard is it to become certified?
Who are an appraiser's customers?
Where does Alan Harvey get the information used to estimate values in King County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?

Define the term "Appraisal" (Back to top)

The appraisal process is an evaluation that produces an opinion of value. This opinion or estimate is found through a formal process that typically uses three "common approaches to value". One of the methods in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the house, less the depreciation and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which deals with finding a comparison to other similar properties within a close proximity which have recently sold. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a home. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

Describe what an appraiser does (Back to top)

An appraiser forumlates a professional, unbiased assessment of market value, in the support of real estate exchanges. Appraisers summarize their expert conclusions in appraisal reports.

What are the reasons I would request your services? (Back to top)

There are many reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:

To receive a loan.
If you would like to lower your property tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To challenge improperly assessed property taxes.
If you need to settle an estate.
To give you an edge when purchasing real estate.
To determine a likely sales price when selling real estate.
To ensure parties are provided just compensation in eminient domain cases.
Because an official agency such as the IRS requires it.
If you are ever involved in a civil case.

For a more extensive description of the appraisal process click here.

Is an appraisal the same as a home inspection? (Back to top)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. The purpose of a home inspection is to investigate the structure of the house from basement to attic. For the most part, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

My agent performed a CMA for me. Is that the same as an appraisal? (Back to top)

To be honest, they share nothing in common. What the CMA depends on are vague trends. Appraisals use comparable sales which are valid resources. In addition, the appraisal checks other factors like condition, neighborhood and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person behind the report is actually the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the agent, who gets a commission based upon the value of the home.

What does the appraisal report contain? (Back to top)

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:

The client and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Pertinent property characteristics, including: location, physical description, legal attributes, economic factors, 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 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 included in the process of completing the assignment.

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

Once the appraisal is done, how can I have confidence that the final number is veritable? (Back to top)

In communicating an appraisal report, each appraiser must ensure the following:

The appraisal contained a suitable analysis of the information.

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

That appraisal services were not executed in a careless or negligent fashion.

That a solid, substantiated appraisal report was communicated.

To become a state licensed appraiser, we must fulfill considerable education and experience requirements that prepare us to formulate an unbiased opinion. Likewise, appraisers must obey a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The rules for carrying out an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he or she must then take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who are an appraiser's customers? (Back to top)

Most of the time, appraisers are hired by lenders to estimate the value of a home involved in a loan transaction - to make sure the subject is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Alan Harvey get the information used to estimate values in King County or other areas? (Back to top)

One of the primary activities of an appraiser is to compile property 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 noted by the appraiser during an inspection.

General data is received from a variety of sources. To research recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we research tax records and other public documents that are usually online nowadays. Appraisers routinely 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 gathers general data from his or her past experience in doing assignments for other houses in the same market.

How can a licensed appraiser help me? (Back to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

What exactly is PMI and how can I get rid of it? (Back to top)

PMI is the common abbreviation for for Private Mortgage Insurance. It covers the lender in case a borrower defaults on the loan and the value of the house is less than the balance of the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Is PMI a part of your monthly house payment?Call Alan Harvey today at 4256819516 or send us an e-mail. A new appraisal could save you thousands.

How do I get ready for the appraiser? (Back to top)

We begin with an inspection of the property. 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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:

Written property agreements, such as a maintenance easement for a shared driveway.
Title policy that lists encroachments or easements.
Information on "Homeowners Associations" or condominium covenants and fees.
Find copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
A list of "proposed" improvements if the property is to be appraised "as complete".

Define "Market Value" (Back to top)

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? (Back to top)

For mortgage transactions, the lender requests 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 included with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner hiring the appraiser for things outside securing a mortgage. In these cases, the appraiser may stipulate the purpose of the appraisal; 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.

I want to get more for my house. Where should I spend money renovating? (Back to top)

The added value of a particular amenity truly depends on the local 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 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 are right up there with kitchens, yielding 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.