Springs Appraisals has answers to "Frequently Asked Questions"

Springs Appraisals is willing to reply to any inquiries you might have about appraisals or real estate in Colorado Springs and El Paso County. Feel free to contact us today.

Describe an appraisal
What does an appraiser do?
What would cause me to need a real estate appraisal?
How is an appraiser different than a home inspector?
My agent performed a CMA for me. Is that the same as an appraisal?
What does the appraisal report contain?
Once the appraisal has been completed, how can I have certainty that the final number is valid?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does Springs Appraisals get the data used to estimate values in El Paso 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?
Define "Market Value"
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Back to top)

The appraisal process is an evaluation that leads to an opinion of value. There are three "common approaches to value" which helps the real estate appraiser arrive at this opinion or valuation. One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, plus the land value. Easily the most common approach in finding the likely sales price of a home is the Sales Comparison Approach which deals with concluding a comparison to comparable homes nearby. The Sales Comparison Approach is commonly the most definitive and best indicator of 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 produce.

What does an appraiser do?   (Back to top)

An appraiser produces a fair and credible opinion of market value, in the support of real estate transactions. Appraisers reveal the details of their conclusions in appraisal reports.


What would cause me to need a real estate appraisal?   (Back to top)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal include:
  • To obtain a loan.
  • To reduce your property taxes.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To contest high property taxes.
  • To deal with an estate.
  • To provide you a leg-up when purchasing real estate.
  • To find a likely property value 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.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
Click here for a more extensive explanation of the process involved in getting an appraisal.


How is an appraiser different than a home inspector?   (Back to top)

Home inspectors do not figure out an opinion of value and do not do appraisal reports. An inspection is a third-party investigation of the available structure and appliances of a house, from the roof to the bottom. The general home inspector's report will contain 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 accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

My agent performed a CMA for me. Is that the same as an appraisal?   (Back to top)

Honestly, they share nothing in common. What the CMA relies upon are ill-defined trends. Appraisals use comparable sales which are valid resources. Also, the appraisal looks at other factors like condition, neighborhood 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 most significant factor is who's behind the report. 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. A certified, state licensed professional who bases a career on valuing properties in and around El Paso County creates the appraisal. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value conclusion, unlike the agent, whose income is tied to the price of the home.

What does the appraisal report contain?   (Back to top)

Each report must indicate a believable value opinion and should document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The purpose of the assignment.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.(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 real property interest valued, 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 included in the activity of completing the job.
For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been completed, how can I have certainty that the final number is valid?   (Back to top)

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

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

  • That appraisal services were not rendered in a careless or negligent manner.

  • The final appraisal report was understandable, credible and conclusive.
There are rigorous education and experience requirements that must be fulfilled in order to get an appraisal license in Colorado. Likewise, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Licensing and certification requires coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he/she must then take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers?   (Back to top)

Commonly, appraisers are called upon by mortgage lenders to render a value opinion on a house involved in a loan transaction - to make sure the subject is truly adequate collateral for the loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does Springs Appraisals get the data used to estimate values in El Paso County or other areas?   (Back to top)

Compiling information is one of the primary things an appraiser engages in. Data can be classified as either Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser while on site.

General data is gathered from a numerous places. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents. Appraisers often have 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 last but not least, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.


What can a full appraisal do for me?   (Back to top)

An appraisal is a valuable tool anytime your home's value is relevant to some financial decision. When selling your home, an appraisal assists you in setting the most appropriate price. If you're buying, it makes sure you don't overpay. For parties settling an estate or divorce, an appraisal from Springs Appraisals is the best way to ensure assets are split up fairly. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making smart financial decisions.


What exactly is PMI and how can I get rid of it?   (Back to top)

PMI is short for for Private Mortgage Insurance. This added policy protects the lender in the event a borrower defaults on the loan and the market price of the home is lower than what is owed 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.

Does your monthly mortgage payment have a lineitem for PMI?Call Springs Appraisals today at 719-637-2658 or send us an e-mail. A new appraisal could save you thousands.

Does the appraiser need anything from the homeowner in advance?   (Back to top)

The first step in most appraisals is the property inspection. 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. On the home's interior, pick up any clutter and make sure we can access things like furnaces and water heaters. In the yard, trim any landscaping so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Records on the latest purchase of the property in the last three years.
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • Most recent real estate tax bill from El Paso and or legal description of the property.
  • 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).
  • Information on "Homeowners Associations" or condominium covenants and fees.

Define "Market Value"   (Back to 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?   (Back to top)

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 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 hires an appraiser directly. In these situations, the appraiser may state how the appraisal can be used; 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.


Which home renovations add the most to the price?   (Back to top)

This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

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%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.


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