AFR Appraisals has answers to "Frequently Asked Questions"

AFR Appraisals is always prepared to answer any inquiries you might have about appraisals in Thornton and Adams County. Contact AFR Appraisals today to learn how we can help solve your specific valuation problems.

Define the term "Appraisal"
Describe what an appraiser does
What are the reasons a person would need your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
Once the appraisal has been completed, what assurance is there that the value indicated is veritable?
What goes into an appraiser's certification?
Who employs appraisers?
Where does AFR Appraisals get the data used to estimate values in Adams County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



Define the term "Appraisal"   (See list of FAQ's)

The method of creating an appraisal deals with an estimation which leads to an opinion of value. This opinion or estimate is discerned through a formal process that typically uses three "common approaches to value". The Cost Approach is one of the approaches that real estate appraisers use to find value; it involves discerning what the improvements would cost less physical degradation, plus the land value. Another of the processes is the Sales Comparison Approach - which deals with discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to determine the value of a property based on what an investor would pay based on the capital produced by the building.

Describe what an appraiser does   (See list of FAQ's)

An appraiser produces an unbiased and well substantiated determination of market value, often in the context of a real estate purchase. Appraisers exhibit their professional conclusions in appraisal reports.


What are the reasons a person would need your services?   (See list of FAQ's)

There are many reasons to obtain an appraisal with the usual reason being real estate and mortgage transactions. Other reasons for getting an report include:
  • To obtain a loan.
  • If you would like to lower your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove Primary Mortgage Insurance.
  • To challenge improperly assessed property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing real estate.
  • To figure out an honest sales price when selling 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 home.
  • If you ever find yourself in a lawsuit.
If you need more information regarding the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (See list of FAQ's)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. An inspection is a third-party evaluation of the accessible structure and appliances of a property, from the roof to the bottom. The stereotypical home inspector's report will contain an evaluation of the condition 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)?   (See list of FAQ's)

Simply, they have nothing in common. The CMA depends on indistinct local market trends. Appraisals use comparable sales which are valid resources. The appraisal report will also contain neighborhood and construction prices. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is the person behind the report. Real estate agents produce CMA's, and they don't always know the whole market or bear specific competence when it comes to home valuation. A certified, state licensed professional who has formed their livelihood on valuing properties in and around Adams County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for work they perform, regardless of their value conclusion.

What's in an appraisal report?   (See list of FAQ's)

Each report must reflect a believable value opinion and must document the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the report.
  • The purpose of the assignment.
  • The type of value contained and a definition of the value reported.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property characteristics, including: location, physical description, legal attributes, economic factors, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible items.
  • Any 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.
  • What was included in the process of completing the appraisal.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been completed, what assurance is there that the value indicated is veritable?   (See list of FAQ's)

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

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

  • That appraisal services were delivered in a careful and conscientious fashion.

  • The final appraisal report was clear, legitimate and defensible.
To become a state licensed appraiser, there are extensive education requirements as well as real world experience that must be attained. Plus, appraisers must abide by a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (See list of FAQ's) Licensing and certification requires coursework, tests and practical experience. Once licensed, he/she must then engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who employs appraisers?   (See list of FAQ's)

Mortgage lenders are an appraiser's typical client, using their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does AFR Appraisals get the data used to estimate values in Adams County or other areas?   (See list of FAQ's)

Compiling information is one of the main tasks an appraiser engages in. 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 gathered by the appraiser during an inspection.

General data is collected from a numerous places. To research recent sales to be used as "comps", we often go to the local Multiple Listing Service. To double-check actual sales prices, we research tax records 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 product.

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


Why should I hire a licensed appraiser?   (See list of FAQ's)

If you're making some sort of financial decision and the value of your home is relevant, you'll want a full appraisal. 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. A house is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


What exactly is PMI and how can I get rid of it?   (See list of FAQ's)

PMI is short for for Private Mortgage Insurance. This added policy protects the lender in case a borrower doesn't pay on the loan and the market price of the house is lower than the balance of 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.

The amount you keep from cancelling your PMI pays for the appraisal in a matter of months. Nobody is more qualified than AFR Appraisals when it comes to analyzing real estate appreciation in Thornton and Adams County. Contact us today.

How do I get ready for the appraiser?   (See list of FAQ's)

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 the appraiser has easy access to the exterior of the house . Trim any shrubs and move any items that would get in our way while we measure the structure. On the inside, make sure the appraiser 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.
  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • 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).
  • Most recent real estate tax bill from Adams and or legal description of the property.

What is "Market Value?"   (See list of FAQ's)

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."



Once complete, who actually owns the appraisal report?   (See list of FAQ's)

For mortgage transactions, the lender requests 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 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.

The exception to this rule is when a home owner engages an appraiser directly. In these situations, the appraiser may state the purpose of the appraisal; 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.


Are some home improvements more worthwhile than others?   (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. 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 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.