MGK Properties has answers to "Frequently Asked Questions"


	MGK Properties is more than happy to reply to any inquiries you might have about appraisals in Hemet and Riverside County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to 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 can I expect to see in my appraisal report?
Once the report has been completed, how can I have assurance that the value indicated is valid?
How are appraisers certified?
Who do appraisers work for?
Where does MGK Properties get the data used to estimate values in Riverside County or other areas?
Why should I hire a licensed appraiser?
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
What does "Market Value" mean?
Who actually owns the appraisal report?
Which home renovations add the most to the price?

What is an appraisal? (Go to list of questions)

An appraisal is an evaluation leading to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser come to this opinion or estimate. The Cost Approach is one of the approaches that appraisers use to find value; it involves figuring what the improvements would cost without physical degradation, adding the land value. The Sales Comparison Approach deals with searching for comparable houses in close proximity and figuring out the value based on comparing those properties to the home being appraised. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it involves estimating what an investor would pay based on the capital produced by the property.

Describe what an appraiser does (Go to list of questions)

An appraiser provides an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers present their investigation in appraisal reports.

What would cause me to need your services? (Go to list of questions)

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

To receive a loan.
To lower your tax burden.
To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.
To challenge improperly assessed property taxes.
To deal with an estate.
To give you an edge when purchasing a home.
To figure out 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 require an appraisal on every home.
If you ever find yourself in a civil case.

If you need a more detailed explanation of the appraisal process, please click here.

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

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will evaluate the structure of the house, from the top to the bottom. Usually, a home inspection report will discuss the amenities and the requirements of the home: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

Is an appraisal the same as a comparative market analysis(CMA)? (Go to list of questions)

To be blunt, it's like comparing Shakespeare to reality TV. The CMA depends on indefinite market trends. An appraisal relies on comparable sales that can be validated by public record. Location and construction prices are also important in an appraisal. 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 person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent party, with no conditional interest in the value conclusion, unlike the agent, who gets a commission based upon the price of the home.

What can I expect to see in my appraisal report? (Go to list of questions)

Every appraisal should indicate a credible estimate of value and will clearly state the following:

The client and other intended users.
The intended use of the appraisal.
The appraisal's purpose.
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 attributes, including: location, physical description, legal attributes, economic attributes, the real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
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 activity of completing the job.

For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, how can I have assurance that the value indicated is valid? (Go to list of questions)

In communicating an appraisal report, each appraiser must ensure the following:

That the information analysis utilized in the appraisal was proper.

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

That appraisal services were delivered in a careful and judicious manner.

The final appraisal report was clear, legitimate and defensible.

To become a state licensed appraiser, we must satisfy intense education and experience requirements that prepare us to produce an unbiased opinion. In addition, appraisers must abide by a meticulous industry code of ethics and comply with 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).

(Go to list of questions) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and real world experience. Once licensed, he/she is required to engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who do appraisers work for? (Go to list of questions)

Commonly, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction - to make sure the property is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does MGK Properties get the data used to estimate values in Riverside County or other areas? (Go to list of questions)

One of the most important tasks an appraiser engages in is to compile property data. Data can be described as either Specific or General. Specific data is taken from the home 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. To double-check actual sales prices, we use items in the assessor's office and other public documents. Flood zone data is retrieved from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser assembles general data from his or her past experience in creating appraisals for other houses in the same market.

Why should I hire a licensed appraiser? (Go to list of questions)

An appraisal is a worthwhile anytime the value of your home is pertinent to a financial decision. For those selling a home, you'll want to figure out 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. For people settling an estate or divorce, an appraisal from MGK Properties is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.

My mortgage statement has an item on it for PMI? Can I get rid of that? (Go to list of questions)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan protects the lender in the event a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes 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 money you keep from dropping the PMI required when you got your mortgage pays for the appraisal in no time. MGK Properties stays current with value trends in Hemet and Riverside County. Contact us today.

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

We begin with an inspection of the home. 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. Inside, 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 things go faster and improve the quality of the appraisal report by having the following things on hand:

A survey or plot map of the property and building (if readily available).
Information on any written private easements, such as a shared driveway with a neighbor.
Most recent real estate tax bill and or legal description of the property.
A list of any major home improvements and enhancements, 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? (Go to list of questions)

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 actually owns the appraisal report? (Go to list of questions)

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 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 hiring the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

Which home renovations add the most to the price? (Go to list of questions)

It really depends on the market. 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 weren't far behind, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.