SJC Appraisals has answers to "Frequently Asked Questions"

SJC Appraisals is always prepared to handle any concerns you might have about appraisals or real estate in San Juan County. Contact SJC Appraisals today to learn how we can help solve your valuation problems.

Describe an appraisal
What does an appraiser do?
What would cause me to require your services?
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?
After completing the appraisal, what assurance is there that the value conclusion is trustworthy?
What are the requirements to be a certified appraiser?
Who hires SJC Appraisals
Where does SJC Appraisals get the information used to estimate values in San Juan County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal inspection
Define "Market Value"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (See list of FAQ's)

The process of writing an appraisal report deals with an evaluation which forms an opinion of value. The appraiser will use a number of "approaches," typically three, to arrive at the estimation of market value. One of them is the Cost Approach - which is what it would cost to replace the improvements, minus physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for similar homes in the vicinity and finding value based on comparing those homes to the house being appraised. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a house. One of the least common approaches in appraising homes is the Income Approach, which is generally used to determine the market value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (See list of FAQ's)

An appraiser produces a fair and credible opinion of market value, to be used in making real estate transactions. Appraisers document their analysis in appraisal reports.


What would cause me to require your services?   (See list of FAQ's)

There are a lot of reasons to purchase an appraisal from SJC Appraisals with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:
  • To get a loan.
  • To reduce your property taxes.
  • To build a case for a homeowner's equity and remove insurance.
  • To fight inflated property taxes.
  • To settle an estate.
  • To give you a leg-up when purchasing a home.
  • To determine a reasonable property value when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
Click here for a more detailed explanation of the process involved in getting an appraisal.


How is an appraisal different than a home inspection?   (See list of FAQ's)

Home inspectors do not generate an opinion of value and do not do appraisal reports. The point of a home inspection is to investigate the structure of the home from bottom to attic. Usually, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical systems, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

To be honest, they share nothing in common. The CMA relies on vague market trends. An appraisal relies on comparable sales that can be verified by public record. In addition, the appraisal looks at other factors like condition, area and building prices. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person behind the report is frankly the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. 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 assignments, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (See list of FAQ's)

Each report must demonstrate a credible estimate of value and must document the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible considerations.
  • All 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 activity of completing the appraisal.
For a more comprehensive look at the work that goes into an appraisal report click here: Sample Appraisal Report


After completing the appraisal, what assurance is there that the value conclusion is trustworthy?   (See list of FAQ's)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • That the information analysis utilized in the appraisal was suitable.

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

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

  • The final appraisal report was clear, sound and conclusive.
There are intense education and experience requirements that must be fulfilled in order to become a licensed appraiser in New Mexico. In addition, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and documenting 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 real world experience. Once licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires SJC Appraisals   (See list of FAQ's)

Mortgage lenders are an appraiser's typical customer, needing their services to ensure a home involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does SJC Appraisals get the information used to estimate values in San Juan County or other areas?   (See list of FAQ's)

Compiling data is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser during an inspection.

General data is gathered from a number of sources. To look up recent sales to be used as "comps", we typically use the local Multiple Listing Service. To double-check actual sales prices, we research tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser assimilates general data from his or her collective knowledge gained from doing assignments for other properties in the same market.


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

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. 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. When buying, be sure you're not overpaying by getting an independent appraisal. 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. Without knowing its real value, wise financial decisions are impossible.


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

PMI stands for Private Mortgage Insurance. PMI covers the lender in case a borrower defaults on the loan and the value of the home is less than what is owed on 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 the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Nobody is more qualified than SJC Appraisals when it comes to analyzing real estate appreciation in Farmington and San Juan County. Contact us today.

Should I do anything in advance of the appraisal inspection   (See list of FAQ's)

We begin with an inspection of the property. During this process, we 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. The best thing you can do to help is make 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. Indoors, make sure we can get to appliances like furnaces and water heaters.

You can make things go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if readily available).
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • Most recent real estate tax bill and or legal description of the property.
  • Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

Define "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)

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

This rule doesn't apply when a home owner engages 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 stipulated 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)

The added value of a particular amenity truly depends on the local market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

As a rule, the most value returned 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, yielding 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.