Matthews Real Estate Appraisal Services has answers to "Frequently Asked Questions"

Matthews Real Estate Appraisal Services is eager to reply to any questions you might have about appraisals in Orange County. Feel free to contact us today.

Describe an appraisal
Describe what an appraiser does
What would cause me to request a real estate appraisal?
How is an appraisal different than a home inspection?
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 report has been delivered, how can I have assurance that the final number is veritable?
What goes into an appraiser's certification?
Who hires Matthews Real Estate Appraisal Services
Where does Matthews Real Estate Appraisal Services get the information used to estimate values in Orange County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal inspection
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



Describe an appraisal   (Go to list of  questions)

An appraiser performs an evaluation that generates an opinion of value. There are three "common approaches to value" which helps the real estate appraiser conclude this opinion or estimate. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, minus age and physical dilapidation, adding the land value. Another of the approaches is the Sales Comparison Approach - which involves finding a comparable analysis to other similar nearby properties which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it deals with estimating what an investor would pay based on the income produced by the property.

Describe what an appraiser does   (Go to list of  questions)

An appraiser generates an unbiased and well substantiated determination of market value, in the support of real property transactions. Appraisers demonstrate their professional conclusions in appraisal reports.


What would cause me to request a real estate appraisal?   (Go to list of  questions)

There are many reasons to get an appraisal with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an appraisal report include:
  • To get a loan.
  • If you would like to reduce your property tax obligations.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To contest inflated property taxes.
  • To deal with an estate.
  • To give you an edge when purchasing real estate.
  • To determine 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.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
If you need more information about the appraisal process, please click here.


How is an appraisal different than a home inspection?   (Go to list of  questions)

Home inspectors do not estimate an opinion of value and do not do appraisal reports. The point of a home inspection is to evaluate the structure of the house from bottom to rooftop. Commonly, a home inspection report will discuss the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

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

Frankly, it's apples and oranges. The CMA relies on indefinite trends in the market. The appraisal relies on similar definite comparable sales. Also, the appraisal verifies other factors like condition, neighborhood and building prices. 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 behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent party, with no conditional interest in the value of a home, 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)

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:
  • The client and whose purposes the appraisal is to serve.
  • 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.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
  • 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 included in the activity of completing the assignment.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report


Once the report has been delivered, how can I have assurance that the final number is veritable?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • The appraisal used an appropriate analysis of the information.

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

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

  • That a solid, supportable appraisal report was conferred.
To become a state licensed appraiser, there are extensive education requirements as well as on the jobexperience that must be attained - all with the end goal of being able to render unbiased value opinions. Plus, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he/she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires Matthews Real Estate Appraisal Services   (Go to list of  questions)

Typically, appraisers are employed by lenders to render a value opinion on a house involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Matthews Real Estate Appraisal Services get the information used to estimate values in Orange County or other areas?   (Go to list of  questions)

One of the primary things an appraiser does is to assimilate property data. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser during an inspection.

General data is collected from a many sources. To look up recent sales to be used as "comps", an appraiser will often go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need to report when a property lies 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 creating appraisals for other properties in the same market.


How can a licensed appraiser help me?   (Go to list of  questions)

If you're making some sort of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to determine 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. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Matthews Real Estate Appraisal Services is the best way to ensure assets are divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Go to list of  questions)

PMI is short for for Private Mortgage Insurance. This additional plan takes care of the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than the balance of 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.

Did you secure your mortgage with less than 20% down? Call Matthews Real Estate Appraisal Services today at (714)990-9230. You may be able to save money by removing your Private Mortgage Insurance payment.

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

We begin with an inspection of the home. 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. 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 shrubs and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if available).
  • List of personal property to be sold with the building.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What does "Market Value" mean?   (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 requests 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 certainly entitled to a copy of the appraisal - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly. 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 noted otherwise, the home owner can do whatever they want with the appraisal.


Which home renovations add the most to the price?   (Go to 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

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