Appraisal Management Group has answers to "Frequently Asked Questions"

Appraisal Management Group is ready to answer any questions you might have about appraisals or real estate in Clackamas County. Contact Appraisal Management Group today to see how we can help solve your specific valuation problems.

Describe an appraisal
What does an appraiser do?
What would cause me to require your services?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Once the assignment has been completed, how can I have assurance that the value conclusion is accurate?
How are appraisers certified?
Who are an appraiser's customers?
Where does Appraisal Management Group get the data used to estimate values in Clackamas County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?



Describe an appraisal   (List of questions)

An appraiser provides an estimation that produces an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. The Cost Approach is one of the methods that real estate appraisers use to find value; it involves concluding what the improvements would cost less physical depreciation, adding the land value. The Sales Comparison Approach involves searching for comparable homes nearby and figuring out the value based on comparing those homes to the home being appraised. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it involves estimating what an investor would pay based on the income produced by the property.

What does an appraiser do?   (List of questions)

An appraiser forumlates a professional, unbiased opinion of market value, in the support of real estate transactions. Appraisers summarize their expert investigation in appraisal reports.


What would cause me to require your services?   (List of questions)

There are many reasons to purchase an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for getting an appraisal include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To contest improperly assessed property taxes.
  • To deal with an estate.
  • To offer you a leg-up when purchasing real estate.
  • To find an honest sales price 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 house.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraiser different than a home inspector?   (List of questions)

The appraiser is not a home inspector and does not do a complete home inspection. The purpose of a home inspection is to evaluate the structure of the property from basement to top. The general home inspector's report will include an evaluation of the condition of the house'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.

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

To be blunt, it's like comparing Shakespeare to reality TV. The CMA utilizes market trends to create most of their business. An appraisal utilizes comparable sales that can be validated by public record. The appraisal report will also include neighborhood and building values. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is the person doing the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no conditional interest in the value of a home, unlike the real estate agent, who gets a commission based upon the value of the home.

What's in an appraisal report?   (List of questions)

Every report should demonstrate a credible estimate of value and should clearly state the following:
  • The client and other intended users.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Relevant property attributes, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, trade fixtures 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 considered when completing the job.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, how can I have assurance that the value conclusion is accurate?   (List of questions)

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

  • Whether individually or collectively, there were no crucial errors contained in the appraisal, nor any material details left out.

  • That appraisal services were delivered in a careful and cognizant manner.

  • That a credible, defensible appraisal report was communicated.
To become a state licensed appraiser, we must satisfy considerable education and experience requirements that train us to produce an unbiased opinion. Plus, appraisers must stick to a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (List of questions) Regulations regarding licensing and certification are different from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and experience working under a supervisor. Once licensed, he or she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (List of questions)

Mortgage lenders are an appraiser's most likely customer, needing their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Appraisal Management Group get the data used to estimate values in Clackamas County or other areas?   (List of questions)

Collecting data is one of the primary functions of an appraiser. Data can be split into Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a number of places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. To verify actual sales prices, we research items in the assessor's office and other public documents. Appraisers often need to report when a property lies in a flood zone, and that information is retrieved from a FEMA data outlet such as a la mode's InterFlood product.

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

How can a licensed appraiser help me?   (List of questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to determine a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Appraisal Management Group is the best documentation to ensure assets are split up evenly. 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?   (List of questions)

PMI stands for Private Mortgage Insurance. PMI guards the lender in the event a borrower defaults on the loan and the market price of the property is less 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? Contact Appraisal Management Group today at 503.684.9548 to see if you can cancel your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection   (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 find our way to things like furnaces and water heaters. On the outside, trim any landscaping 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 survey or plot map of the property and building (if readily available).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • A list of any major home improvements and upgrades, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"?   (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?   (List of questions)

For mortgage transactions, the lender orders 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 entitled 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 situations, the appraiser may stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (List of questions)

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

As a rule, the best ROI 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 are right up there with kitchens, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.