Northern Arizona Appraisal, Inc. has answers to "Frequently Asked Questions"

Northern Arizona Appraisal, Inc. is always prepared to address any inquiries you might have about appraisals or real estate in Maricopa County. Contact us today to see how we can help you with your valuation problems.

Describe an appraisal
Describe what an appraiser does
What would cause me to request services from Northern Arizona Appraisal, Inc.?
How is an appraiser different than a home inspector?
Is an appraisal the same as a comparative market analysis(CMA)?
What's in an appraisal report?
After completing the appraisal, what assurance is there that the value indicated is valid?
What goes into an appraiser's certification?
Who engages the services of appraisers?
Where does an appraiser get the information used to estimate values in Maricopa County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
What is "Market Value?"
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (Top)

The method of performing an appraisal report consists of an inspection which forms an opinion of value. The appraiser will typically use a number of "approaches," typically three, to draw up the estimation of market value. One of the three is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. The most common approach in finding the likely sales price of a house is the Sales Comparison Approach which involves making a comparison to similar houses close by. Being the most popular approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residential property. The Income Approach is mainly used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

Describe what an appraiser does   (Top)

An appraiser produces an objective and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers show their expert findings in appraisal reports.


What would cause me to request services from Northern Arizona Appraisal, Inc.?   (Top)

There are a lot of reasons to obtain an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal include:
  • To obtain a loan.
  • If you would like to reduce your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
  • To fight inflated property taxes.
  • If you need to settle an estate.
  • To provide you an edge when purchasing a home.
  • To find a likely 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.
  • Because a government agency such as the IRS requires it.
  • If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process of getting an appraisal.


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

The appraiser is not a home inspector and does not do a complete home inspection. A third-party home inspector will inspect the structure of the home, from the top to the bottom. The general property inspector's report will include an evaluation of the integrity of the house's heating systems, 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)?   (Top)

Simply put, it's apples and oranges. The CMA relies on indistinct local market trends. Appraisals use similar sales which are valid resources. Also, the appraisal verifies other factors like condition, area and replacement costs. A CMA delivers a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

But the biggest difference is the person doing the report. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat fee for work they perform, regardless of their outcome.

What's in an appraisal report?   (Top)

Every report must demonstrate a supported value opinion and will document the following:
  • Who engaged the appraiser and other intended users.
  • The intended use of the report.
  • The reason for the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
  • 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.
  • The scope of work used while working up the job.
For a more detailed look at all that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, what assurance is there that the value indicated is valid?   (Top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • The appraisal contained an appropriate analysis of the data.

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

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

  • The final appraisal report was understandable, credible and conclusive.
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 gaining the skills required to render unbiased value opinions. Likewise, appraisers must stick to a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Licensing and certification takes classroom study, tests and experience working under a supervisor. Once licensed, he or she is required to take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Top)

Typically, appraisers are called upon by mortgage lenders to render a value opinion on property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for divorce and estate settlements.

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

One of the most important tasks an appraiser must accomplish is to collect property data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is collected from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other public documents verify actual sales prices in a market. Appraisers routinely 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 service.

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


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

An appraisal is a valuable tool whenever your home's value is relevant to some financial decision. When selling your house, an appraisal helps you set a price that maximizes profit and reduces time on the market. 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 home 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?   (Top)

PMI is an acronym for Private Mortgage Insurance. This added policy protects the lender if a borrower defaults on the loan and the value of the property is lower than what the borrower still owes 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 savings from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than Northern Arizona Appraisal, Inc. when it comes to analyzing real estate appreciation in Phoenix and Maricopa County. Contact us today.

Does the appraiser need anything from the homeowner in advance?   (Top)

We begin with an inspection of the home. 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. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of exterior walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Information on the latest purchase of the property in the last three years.
  • Title policy that describes encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • A list of "proposed" improvements if the property is to be appraised "as complete".

What is "Market Value?"   (Top)

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."



Who has rights to the appraisal report?   (Top)

In most real estate transactions, the appraisal is ordered by the lender. 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 report - 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.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may define the purpose of the appraisal; 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.


I want to get more for my house. Where should I spend money renovating?   (Top)

The answer to this is different depending upon the location of the home. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.