Capital City Valuation has answers to "Frequently Asked Questions"

Capital City Valuation is prepared to reply to any concerns you might have about appraisals or real estate in Sacramento and Sacramento County. Don't hesitate to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would I need your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
Once the appraisal has been delivered, what guarantee is there that the final number is trustworthy?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does Capital City Valuation get the data used to estimate values in Sacramento County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
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?



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

An appraiser provides an evaluation that produces an opinion of value. This opinion or estimate is figured through a formal process that usually utilizes the three main "common approaches to value". The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost minus physical degradation, plus the land value. Another of the approaches is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a residence. 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 produce.

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

An appraiser generates a professional, unbiased opinion of market value, in the support of real property exchanges. Appraisers summarize their professional analysis in appraisal reports.


Why would I need your services?   (Go to list of  questions)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for purchasing an appraisal include:
  • If you are applying for a loan.
  • To reduce your property taxes.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To challenge high property taxes.
  • To settle an estate.
  • To provide you an edge when purchasing a home.
  • To figure out a likely 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 home.
  • If you are ever involved in a civil case.
For a more extensive explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Go to list of  questions)

Appraisers do not do complete residential property inspections and are not home inspectors. An inspection is a third-party investigation of the accessible structure and appliances of a property, from the top to the foundation. The archetypal property inspector's report will include an evaluation of the integrity of the house's heating system, 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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Go to list of  questions)

Simply, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal is based on specific definite comparable sales. Also, the appraisal looks at other factors like condition, location and construction prices. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the biggest difference is who's doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the value of the home.

What can I expect to see in my appraisal report?   (Go to list of  questions)

Each report must indicate a credible estimate of value and must identify the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The purpose of the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • 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, permanent equipment installations and even intangible items.
  • Any 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 appraisal.
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been delivered, what guarantee is there that the final number is trustworthy?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must ensure the following:
  • That the information analysis utilized in the appraisal was appropriate.

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

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

  • The final appraisal report was easy to explain, legitimate and defensible.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that train us to formulate an unbiased opinion. Likewise, appraisers must abide by a strict 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).


    (Go to list of  questions) Regulations regarding licensing and certification are different from state to state. However, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once licensed, he or she is required to take 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)

Commonly, appraisers are employed by mortgage lenders to estimate the value of real estate involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

Where does Capital City Valuation get the data used to estimate values in Sacramento County or other areas?   (Go to list of  questions)

Collecting information is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a variety of sources. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Appraisers routinely have to report when a property is in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood service.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

What can a full appraisal do for me?   (Go to list of  questions)

An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. If you're selling your house, an appraisal assists you in setting a price that maximizes profit and reduces time on the market. 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. Knowing its true value is essential to making the right financial decisions.

What exactly is PMI and how can I get rid of it?   (Go to list of  questions)

PMI stands for Private Mortgage Insurance. This supplementary plan protects the lender if a borrower is unable to pay on the loan and the market price of the property is less than what the borrower still owes on 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 Capital City Valuation today at (916) 225-4165 or send us an e-mail. A new appraisal could save you thousands.

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

The first step in most appraisals is the property 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 status of its features. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to items like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

How does an appraiser define "Market Value"?   (Go to list of  questions)

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?   (Go to list of  questions)

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 report - 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.

The exception to this rule is when a home owner hires an appraiser directly. In these cases, the appraiser may define how the appraisal can be used; 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?   (Go to list of  questions)

It really depends on the market. 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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.