Outwest Appraisals, Inc. has answers to "Frequently Asked Questions"


	Outwest Appraisals, Inc. is happy to talk to you about any concerns you might have about appraisals in Salt Lake County. Contact Outwest Appraisals, Inc. today to see how we can help you with your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to 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's in an appraisal report?
After completing the report, what assurance is there that the final number is legitimate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Salt Lake 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?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
Which home renovations add the most to the price?

Define the term "Appraisal" (Go to list of questions)

An appraisal is an evaluation allowing the appraiser to come to an opinion of value. The appraiser will typically use a several "approaches," typically three, to conclude the estimation of market value. One of the methods in use is the Cost Approach, which finds what it would cost to restore the improvements to the home, minus age and physical deterioration, adding the land value. Easily the most common approach in finding the value of a home is the Sales Comparison Approach which deals with figuring a comparison to comparable houses close by. The Sales Comparison Approach is commonly the most definitive and best indicator of a liklely sales price for a home. The Income Approach is generally used for finding the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

What does an appraiser do? (Go to list of questions)

An appraiser offers a fair and credible assessment of market value, to be used in making real estate transactions. Appraisers exhibit their findings in appraisal reports.

What would cause me to request your services? (Go to list of questions)

There are many reasons to get an appraisal from Outwest Appraisals, Inc. with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal include:

If you are applying for a loan.
To lower your tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight improperly assessed property taxes.
If you need to take care of an estate.
To provide you an edge when purchasing a home.
To determine a reasonable price when listing your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS need an appraisal on every property.
If you ever find yourself in a lawsuit.

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

Is an appraisal the same as a home inspection? (Go to list of questions)

Home inspectors do not provide an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the livable structure and appliances of a property, from the roof to the foundation. The general house inspector's report will contain an evaluation of the condition of the property'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.

My agent performed a CMA for me. Is that the same as an appraisal? (Go to list of questions)

Frankly, it's like comparing opera to country. The CMA depends on vague local market trends. The appraisal relies on specific proven comparable sales. Also, the appraisal verifies other factors like condition, location and construction costs. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's behind the report is hands down the most significant difference between a CMA and an appraisal. Real estate agents write 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 something at stake since they get a commission based on 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 value conclusion.

What's in an appraisal report? (Go to list of questions)

Every report should indicate a credible estimate of value 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 value opinion.(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 attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
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.
The scope of work used while working up the appraisal.

For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report

After completing the report, what assurance is there that the final number is legitimate? (Go to list of questions)

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

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 rendered in a careful and conscientious manner.

The final appraisal report was transparent, legitimate and not easily discredited.

To become a state licensed appraiser, there are intense education requirements as well as on the jobexperience that must be logged. Likewise, appraisers must stick to a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for working up an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification is achieved through classroom study, tests and practical experience. Once an appraiser is licensed, he/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 engages the services of appraisers? (Go to list of questions)

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

Where does an appraiser get the data used to estimate values in Salt Lake County or other areas? (Go to list of questions)

One of the main things an appraiser does is to gather data. Data can be categorized 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 received from a number of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need to report when a property is in a flood zone, so that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser assimilates 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? (Go to list of questions)

If you're involved in some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. If you're 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. For people settling an estate or divorce, an appraisal from Outwest Appraisals, Inc. is the best way to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Go to list of questions)

PMI is an acronym for Private Mortgage Insurance. PMI protects the lender in case a borrower defaults on the loan and the market price of the home is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.


	Has your home value appreciated since you first purchased? Call Outwest Appraisals, Inc. today at (801) 474-2263. You may be able to get rid of your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection (Go to list of questions)

The first step in most appraisals is the home inspection. During this process, we 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 get to 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 our visit go faster and improve the accuracy of the appraisal report by having the following things on hand:

A survey or plot map of the property and building (if available).
List of personal property to be sold with the home.
Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
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"? (Go to 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."

Who actually owns the appraisal report? (Go to list of questions)

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 appraisal - 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.

The exception to this rule is when a home owner hires an appraiser directly. In these situations, the appraiser may state the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can use the appraisal for any purpose.

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

It really depends on the market. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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, 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 an oddball for your neighborhood in terms of size.