Hancock Appraisals has answers to "Frequently Asked Questions"


	Hancock Appraisals is willing to address any questions you might have about appraisals or real estate in Rocky Ford and Otero County. Feel free to contact us today.

Describe an appraisal
What does an appraiser do?
What would cause me to need services from Hancock Appraisals?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Upon completion of the report, what assurance is there that the final number is legitimate?
What goes into an appraiser's certification?
Who are an appraiser's customers?
Where does an appraiser get the information used to estimate values in Otero County or other areas?
What can a full appraisal do for 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
How does an appraiser define "Market Value"?
Who actually owns the appraisal report?
I want to get more for my house. Where should I spend money renovating?

Describe an appraisal (Go to list of questions)

The procedure of writing an appraisal report deals with an evaluation which leads to an opinion of value. This opinion or estimate is arrived at using a formal method that typically utilizes the three main "common approaches to value". One of the processes in use is the Cost Approach, which evaluates what it would cost to replace the improvements to the house, less the age and physical deterioration, plus the land value. The Sales Comparison Approach involves searching for comparable properties in the vicinity and figuring out the value based on comparing those prior sales to the house in question. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a home. 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.

What does an appraiser do? (Go to list of questions)

An appraiser offers a professional, unbiased assessment of market value, often in the context of a real estate purchase. Appraisers reveal the details of their analysis in appraisal reports.

What would cause me to need services from Hancock Appraisals? (Go to list of questions)

There are many reasons to order an appraisal from Hancock Appraisals with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:

To receive a loan.
To reduce your property taxes.
To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
To contest inflated property taxes.
To deal with an estate.
To provide you a negotiating tool when purchasing real estate.
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 property.
If you ever find yourself in a lawsuit.

If you need more information about the appraisal process, please click here.

What is the difference between an appraisal and a home inspection? (Go to list of questions)

Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. An inspection is a third-party investigation of the available structure and appliances of a house, from the top to the bottom. The archetypal home inspector's report will contain an evaluation of the condition of the home'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.

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

Simply put, it's night and day. The CMA utilizes market trends to create most of their business. Appraisals use similar sales which are valid resources. The appraisal report will also contain location and construction prices. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is frankly the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, Colorado licensed professional who bases their livelihood on valuing properties in and around Otero County is behind the appraisal. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to accept a previously agreed upon fee for assignments, regardless of their outcome.

What are the contents of an appraisal report? (Go to list of questions)

Every appraisal should indicate a believable value opinion and should identify the following:

The client and whose purposes the appraisal is to serve.
The intended use of the report.
The reason for the assignment.
The type of value reported and a definition of that value.
The effective date of the value opinion.
Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible factors.
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 entailed in the process of completing the assignment.

For a more comprehensive look at what goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the report, what assurance is there that the final number is legitimate? (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 a suitable analysis of the information.

Whether individually or collectively, there were no crucial errors contained in the report, nor any relevant details left out.

That appraisal services were provided in a careful and judicious fashion.

The final appraisal report was transparent, credible and not easily discredited.

There are rigorous classroom and practical experience requirements that must be adhered to in order to achieve the status of "licensed appraiser" in Colorado. In addition, appraisers must obey 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 insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Go to list of questions) Licensing and certification requires coursework, tests and experience working under a supervisory appraiser. Once licensed, he or she is required to complete 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? (Go to list of questions)

Mortgage lenders are an appraiser's most likely client, requesting their services to ensure a home 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 an appraiser get the information used to estimate values in Otero County or other areas? (Go to list of questions)

One of the most important activities of an appraiser is to collect property data. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is received from a number of sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To double-check actual sales prices, we look at items in the assessor's office and other public documents. Flood zone data is gathered from FEMA data outlets, 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.

What can a full appraisal do for me? (Go to list of questions)

If you're involved in some sort of financial decision and the value of your home matters, you'll want a full appraisal. For those selling a home, you'll want to determine the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; 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 home is often the single, largest financial asset anybody owns. Knowing its true value means you can make 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 the event a borrower is unable to pay on the loan and the value 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.


	Does your monthly mortgage payment have a lineitem for PMI?Call Hancock Appraisals today at 7194692746 or send us an e-mail. Documentation of your home's current value could save you thousands.

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

The first step in most appraisals is the property 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 features. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and relocate any items that would get in our way while we measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.

To help speed things along plus ensure a more accurate report, attempt if possible to have the following items:

Any information on the purchase of the property for the last three years.
Title policy that lists encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
Brag sheet that lists major home improvements and enhancements, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
Most recent real estate tax bill from Otero and or legal description of the property.

How does an appraiser define "Market Value"? (Go to 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? (Go to list of questions)

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 appraisal - it's usually bundled with all the other closing documents - but is not allowed to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. In these scenarios, the appraiser may state 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? (Go to list of questions)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, putting in an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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 are right up there with kitchens, yielding 85%. On the contrary, an improvement that may not add value would be painting just for the sake of redecorating.