First Priority Services has answers to "Frequently Asked Questions"


	First Priority Services is prepared to talk to you about any questions you might have about appraisals or real estate in Hayward and Alameda County. Contact us today to learn how we can help you with your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons someone would require a real estate appraisal?
How is an appraisal different than 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 appraisal, how can I have a guarantee that the final number is legitimate?
What does it mean for an appraiser to be licensed?
Who hires First Priority Services
Where does First Priority Services get the information used to estimate values in Alameda County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from me in advance?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?

Describe an appraisal (Back to top)

An appraisal is a thought process that concludes with an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or estimate. The Cost Approach is one of the methods that real estate appraisers use to find the value of a house; it involves figuring what the improvements would cost minus physical degradation, plus the land value. The most common approach in finding the value of a home is the Sales Comparison Approach which concerns making a comparison to similar homes close by. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of 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? (Back to top)

An appraiser offers a fair and credible determination of market value, to be used in making real estate transactions. Appraisers demonstrate their professional investigation in appraisal reports.

What are the reasons someone would require a real estate appraisal? (Back to top)

There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:

If you are applying for a loan.
To lower your tax burden.
To build a case for a homeowner's equity and remove PMI.
To contest improperly assessed property taxes.
If you need to settle an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out a reasonable property value when selling real estate.
To defend 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 home.
If you are ever involved in a civil case.

Click here for a more extensive explanation of the process about getting an appraisal.

How is an appraisal different than a home inspection? (Back to top)

The appraiser is not a home inspector and does not do a comprehensive home inspection. The point of a home inspection is to evaluate the structure of the home from basement to top. Generally, a home inspection report will evaluate 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 capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Honestly, they share nothing in common. The CMA depends on indistinct market trends. An appraisal utilizes comparable sales that can be verified by public record. Area and building values are also precedent in an appraisal. All a CMA does is generate 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 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. A certified, California licensed professional who made a career on valuing real estate in and around Alameda County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their outcome.

What's in an appraisal report? (Back to top)

Every report must reflect a believable value opinion and must document the following:

The client and other intended users.
The intended use of the report.
The reason for the assignment.
The type of value contained and a definition of the value reported.
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, items that are more or less permanently installed and even intangible considerations.
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 comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, how can I have a guarantee that the final number is legitimate? (Back to top)

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

That the information analysis utilized in the appraisal was suitable.

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

That appraisal services were not rendered in a careless or negligent manner.

That a solid, defensible appraisal report was conferred.

To become a state licensed appraiser, we must meet considerable education and experience requirements that train us to produce an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Back to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once an appraiser is licensed, he or she must then engage in continuing education courses so the license remains up to date. To see the specific requirements for any state click here.

Who hires First Priority Services (Back to top)

Most of the time, appraisers are hired by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does First Priority Services get the information used to estimate values in Alameda County or other areas? (Back to top)

One of the primary activities of an appraiser is to compile property data. Data can be categorized as either Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

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

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.

What can a full appraisal do for me? (Back to top)

An appraisal is a valuable tool whenever the value of your home is pertinent to a 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 those settling an estate or divorce, an appraisal from First Priority Services is the best way to ensure assets are split up 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? (Back to top)

PMI stands for Private Mortgage Insurance. It covers the lender in the event a borrower is unable to pay on the loan and the value 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 something increasing your monthly house payment?Call First Priority Services today at (510) 728-0196 or send us an e-mail. A current appraisal could save you thousands.

Does the appraiser need anything from me in advance? (Back to top)

The first step in most appraisals is the property 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. On the home's interior, make sure it is clutter free and that we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

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

Information on the latest purchase of the property in the last three years.
A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
Title policy that describes encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
A list of "proposed" improvements when the property is being 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."

Does the appraisal belong to the bank or the consumer? (Back to top)

In most real estate transactions, the appraisal is ordered by the lender. 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 included 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 stated otherwise, the home owner can do whatever they want with the appraisal.

Which home renovations add the most to the price? (Back to top)

It really depends on the market. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.