profile picture

Sterling Appraisal Group has answers to "Frequently Asked Questions"

Sterling Appraisal Group is always ready to reply to any questions you might have about appraisals or real estate in King County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would someone 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 does the appraisal report contain?
Once the report has been completed, what assurance is there that the value indicated is veritable?
How are appraisers certified?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in King County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Top)

The procedure of writing an appraisal report deals with an estimation which forms an opinion of value. This opinion or estimate is discerned through a formal process that commonly utilizes three "common approaches to value". One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach deals with finding comparable houses in the vicinity and discerning value based on making a comparison of those prior sales to the home being appraised. The Sales Comparison Approach is normally the most definitive and clearest indicator of a liklely sales price for a residential property. The Income Approach is primarily 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 would bring in.

Describe what an appraiser does   (Top)

An appraiser generates a fair and credible opinion of market value, often in the context of a real estate sale. Appraisers document their professional investigation in appraisal reports.


Why would someone require your services?   (Top)

There are a lot of reasons to purchase an appraisal from Sterling Appraisal Group with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To challenge high property taxes.
  • To handle an estate.
  • To offer you a negotiating tool when purchasing a home.
  • To determine an honest property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • 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 definitely help.
Click here for a more detailed explanation of the process about getting an appraisal.


How is an appraiser different than a home inspector?   (Top)

Appraisers do not do perform residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a house, from the top to the foundation. The stereotypical home inspector's report will include an evaluation of the integrity of the home's heating system, 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?   (Top)

Honestly, they share nothing in common. What the CMA relies upon are superficial trends. An appraisal utilizes comparable sales that can be validated by public record. Location and building prices are also a priority in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's creating the report. Real estate agents write CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, Washington licensed professional who made their livelihood on valuing properties in and around King County is behind the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the real estate agent, whose income is tied to the value of the home.

What does the appraisal report contain?   (Top)

Each report should reflect a supported value opinion and should clearly state the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The purpose of the assignment.
  • The type of value reported and a definition of that value.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the property rights in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
  • 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 process of completing the job.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the report has been completed, what assurance is there that the value indicated is veritable?   (Top)

In communicating an appraisal report, each appraiser must make sure of the following:
  • The appraisal used an apropos analysis of the data.

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

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

  • The final appraisal report was clear, legitimate and defensible.
To become a state licensed appraiser, there are strenuous education requirements as well as experience that must be attained. Likewise, appraisers must abide by a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Regulations regarding licensing and certification vary from state to state. In general, licensing and certification is commonly associated with many hours of coursework, tests and practical experience. Once an appraiser is 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 are an appraiser's customers?   (Top)

Mortgage lenders are an appraiser's typical client, requiring their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in King County or other areas?   (Top)

Compiling information is one of the primary tasks an appraiser does. Data can be classified as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is received from a numerous places. To look up recently sold homes to be used as "comps", we often go to the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. 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 most importantly, the appraiser gathers general data from his or her collective knowledge gained from doing assignments for other properties in the same market.


What can a full appraisal do for me?   (Top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. When selling your home, an appraisal will help you determine a price that maximizes profit and reduces time on the market. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from Sterling Appraisal Group is the best way to ensure assets are divided evenly. A house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


What exactly is PMI and how can I get rid of it?   (Top)

PMI is the common abbreviation for for Private Mortgage Insurance. It guards the lender in the event a borrower is unable to pay on the loan and the value of the home is less than what is owed on 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.

The money you keep from dropping your PMI pays for the appraisal in a matter of months. Nobody is more qualified than Sterling Appraisal Group when it comes to analyzing real estate appreciation in Federal Way and King County. Contact us today.

How do I get ready for the appraiser?   (Top)

The first step in most appraisals is the home 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 condition of its amenities. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. In the yard, 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 quality of the appraisal report by having the following things on hand:
  • Records on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • A list of any major home improvements and upgrades, 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 when the property is being appraised "as complete".

What does "Market Value" mean?   (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."



Who has rights to the appraisal report?   (Top)

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 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 hiring the appraiser for things outside securing a mortgage. 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 noted otherwise, the home owner can use the appraisal for any purpose.


Which home renovations add the most to the price?   (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

As a rule, the best ROI from renovating a home comes in the kitchen. 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 weren't far behind, returning 85%. Adding bedrooms and baths can also boost the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.