Orion Appraisal has answers to "Frequently Asked Questions"


	Orion Appraisal is always prepared to talk to you about any inquiries you might have about appraisals or real estate in Park City and Summit County. Contact Orion Appraisal today to talk about how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
What are the reasons someone would need a real estate appraisal?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Upon completion of the report, how can I have confidence that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Summit 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?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?

What is an appraisal? (Return to top)

An appraisal report is an investigation that concludes with an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or estimate. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the approaches is the Sales Comparison Approach - which deals with making a comparison to other similar properties within a close proximity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. One of the least common approaches in appraising homes is the Income Approach, which is generally used to figure the value of a property based on what an investor would pay based on the capital produced by the building.

What does an appraiser do? (Return to top)

An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers document their analysis in appraisal reports.

What are the reasons someone would need a real estate appraisal? (Return to top)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for getting an appraisal report include:

To obtain a loan.
To lower your tax burden.
To demonstrate a homeowner's acquired equity and remove insurance.
To fight inflated property taxes.
To deal with an estate.
To provide you a negotiating tool when purchasing real estate.
To figure out the most probable price when listing your home.
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 need an appraisal on every house.
If you are ever involved in a lawsuit.

If you need more information regarding the appraisal process, please click here.

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

Home inspectors do not produce an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the accessible structure and systems of a property, from the top to the bottom. The stereotypical 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.

Is an appraisal the same as a comparative market analysis(CMA)? (Return to top)

Honestly, they share nothing in common. The CMA depends on vague market trends. The appraisal is reliant on specific verifiable comparable sales. Area and building costs are also a priority in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's creating the report is hands down the biggest difference between a CMA and an appraisal. A CMA is written by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is produce 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 real estate agent, who gets a commission based upon the price of the home.

What are the contents of an appraisal report? (Return to top)

The main objective 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:

Who engaged the appraiser and whose purposes the appraisal is to serve.
How the appraisal is supposed to be used.
The appraisal's purpose.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraiser's opinions and conclusions.
Relevant property characteristics, including: location, physical characteristics, legal attributes, economic factors, 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 considerations.
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.
The scope of work used to complete the appraisal.

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

Upon completion of the report, how can I have confidence that the value conclusion is legitimate? (Return to top)

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

That the information analysis implemented in the appraisal was suitable.

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

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

The final appraisal report was understandable, credible and conclusive.

To become a state licensed appraiser, we must fulfill intense education and experience requirements that enable us to formulate an unbiased opinion. In addition, appraisers must obey a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification is achieved through classroom study, tests and practical experience. Once an appraiser is licensed, he/she must then take continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who engages the services of appraisers? (Return to top)

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

Where does an appraiser get the information used to estimate values in Summit County or other areas? (Return to top)

One of the primary tasks an appraiser engages in is to gather property data. Data can be divided into Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is collected from a many places. To look up recent sales to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we look at items in the assessor's office and other public documents. Appraisers often 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 last but not least, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other houses in the same market.

Why do I need a professional appraisal? (Return 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. If you're selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by commissioning an independent appraisal. For people settling an estate or divorce, an appraisal from Orion Appraisal is the best documentation to ensure assets are divided properly. Simply put, a home 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? (Return to top)

PMI is the common abbreviation for for Private Mortgage Insurance. This added plan guards the lender in the event a borrower defaults on the loan and the value of the house 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.


	Does your monthly loan payment include a fee for PMI?Call Orion Appraisal today at 435-729-9757 or send us an e-mail. A current appraisal could save you thousands.

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

The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and relocate 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.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

Any information on the purchase of the property for the last three years.
List of personal property to be sold with the home.
Most recent real estate tax bill and or legal description of the property.
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 copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

What does "Market Value" mean? (Return to top)

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."

Does the appraisal belong to the bank or the consumer? (Return 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 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 do whatever they want with the appraisal.

How can I get the most ROI out of home improvements? (Return to top)

This really depends on where the home is. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 were second, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.