Pack Appraisal Company has answers to "Frequently Asked Questions"


	Pack Appraisal Company is eager to handle any concerns you might have about appraisals or real estate in Edwards and Eagle County. Contact Pack Appraisal Company today to talk about how we can help solve your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons I would require a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What's in an appraisal report?
Upon completion of the report, how can I have certainty that the final number is legitimate?
What are the requirements to be a certified appraiser?
Who do appraisers work for?
Where does an appraiser get the data used to estimate values in Eagle County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

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

The procedure of performing an appraisal report consists of an estimation which leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser come to this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find value; it involves discerning what the improvements would cost without physical depreciation, adding the land value. The Sales Comparison Approach deals with searching for similar houses in the vicinity and figuring out the value based on making a comparison of those prior sales to the house being appraised. Generally speaking, the Sales Comparison Approach is the most accurate indicator of market value of a home. One of the least common approaches in appraising houses is the Income Approach, which is generally used to find the market value of a property based on what an investor would pay based on the capital produced by the property.

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

An appraiser generates a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers show their expert findings in appraisal reports.

What are the reasons I would require a real estate appraisal? (See list of FAQ's)

There are many reasons to get an appraisal from Pack Appraisal Company with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:

If you are applying for a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To fight inflated property taxes.
To settle an estate.
To offer you a negotiating tool when purchasing real estate.
To find the most probable property value when putting your home on the market.
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 lawsuit.

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

How is an appraiser different than a home inspector? (See list of FAQ's)

The appraiser is not a home inspector nor does he/she do a complete home inspection. An inspection is a third-party evaluation of the livable structure and systems of a home, from the roof to the foundation. The stereotypical property inspector's report will contain an evaluation of the integrity of the property'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.

What is the difference between an appraisal and a comparative market analysis (CMA)? (See list of FAQ's)

To be honest, they share nothing in common. What the CMA depends on are ill-defined trends. An appraisal utilizes comparable sales that can be proven by public record. The appraisal report will also include area and construction prices. 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 behind the report. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. A certified, state licensed professional who made their livelihood on valuing real estate in and around Eagle County is behind the appraisal. Moreover, the appraiser is an unbiased voice, with no vested interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

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

The main objective of an appraisal report is to give a value opinion, and depending on the scope of the report, you'll usually see the following:

Who engaged the appraiser and other intended users.
The intended use of the appraisal.
The reason for the assignment.
The type of value reported and a definition of the value reported.
The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property characteristics, including: location, physical description, 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 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.
The scope of work used while working up the appraisal.

For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, how can I have certainty that the final number is legitimate? (See list of FAQ's)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used a suitable analysis of the data.

Whether individually or collectively, there were no substantial errors contained in the appraisal, nor any relevant details left out.

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

That a solid, supportable appraisal report was communicated.

To become a state licensed appraiser, there are extensive education requirements as well as experience that must be logged. Plus, appraisers must obey a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The tenets 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) Licensing and certification takes classroom study, tests and practical experience. Once licensed, he/she is required to complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who do appraisers work for? (See list of FAQ's)

Typically, appraisers are hired by mortgage lenders to estimate the value of a house involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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

One of the most important activities of an appraiser is to compile property data. Data can be split into Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is collected from a variety of places. To research recent sales to be used as "comps", we often go to the local Multiple Listing Service. To double-check actual sales prices, we use tax records and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood system.

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

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

An appraisal is a worthwhile whenever the value of your home is pertinent to a financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. When buying, be sure you're not overpaying by commissioning an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, 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? (See list of FAQ's)

PMI stands for Private Mortgage Insurance. It guards the lender in case a borrower doesn't pay on the loan and the value of the home 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.


	The money you keep from dropping the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Pack Appraisal Company is in the business of tracking value trends in Edwards and Eagle County. Contact us today.

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 features. Inside, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

A plot plan or survey of the house and land (if available).
Information on any written private agreements, such as a shared driveway with a neighbor.
Title policy that lists encroachments or easements.
A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
A list of "proposed" improvements when the property is being appraised "as complete".

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."

Once complete, who actually owns the appraisal report? (See list of FAQ's)

In most real estate transactions, the appraisal is ordered by the lender. 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 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 stipulated 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)

This really depends on where the home is. 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 are right up there with kitchens, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.