REID E. CHOATE & ASSOCIATES, LLC has answers to "Frequently Asked Questions"

REID E. CHOATE & ASSOCIATES, LLC is always more than happy to address any concerns you might have about appraisals in Hawaii County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to request a real estate appraisal?
Is an appraisal the same as a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the assignment has been completed, how can I have confidence that the value conclusion is accurate?
How hard is it to become certified?
Who do appraisers work for?
Where does REID E. CHOATE & ASSOCIATES, LLC get the data used to estimate values in Hawaii County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What does "Market Value" mean?
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



What is an appraisal?   (Return to top)

The process of producing an appraisal report consists of an investigation which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or estimate. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the home, minus depreciation and physical dilapidation, plus the land value. The Sales Comparison Approach deals with searching for comparable properties in the vicinity and discovering the value based on comparing those houses to the home being investigated. Usually, 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 deals with estimating what an investor would pay based on the income generated by the property.

Describe what an appraiser does   (Return to top)

An appraiser offers a professional, unbiased determination of market value, often in the context of a real estate exchange. Appraisers present their expert investigation in appraisal reports.


What would cause me to request a real estate appraisal?   (Return to top)

There are a lot of reasons to purchase an appraisal with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
  • To get a loan.
  • To lower your tax burden.
  • To build a case for a homeowner's equity and remove PMI.
  • To contest inflated property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To find an honest price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you ever find yourself in a lawsuit.
Click here for a more extensive explanation of the process involved in getting an appraisal.


Is an appraisal the same as a home inspection?   (Return to top)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will inspect the structure of the house, from the roof to the bottom. The archetypal home inspector's report will include an evaluation of the condition 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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Return to top)

To be honest, they have nothing in common. The CMA uses market trends to generate most of their business. The appraisal depends on similar definite comparable sales. The appraisal report will also contain neighborhood and construction values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's 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, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price whereas the appraiser is bound by a code of ethics to accept a flat fee for work they perform, regardless of their value conclusion.

What are the contents of an appraisal report?   (Return to top)

The main purpose of an appraisal report is to provide a value opinion, and depending on the scope of the report, one will customarily see the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the appraisal.
  • The type of value contained and a definition of that value.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible items.
  • 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 considered while working up the appraisal.
For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report


Once the assignment has been completed, how can I have confidence that the value conclusion is accurate?   (Return to top)

In communicating an appraisal report, each appraiser must see to it that each of the items below are covered:
  • The appraisal contained analysis of the data.

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

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

  • That a solid, substantiated appraisal report was conferred.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that give us the background to formulate an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and reporting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Licensing and certification requires coursework, tests and practical experience. Once licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (Return to top)

Most of the time, appraisers are hired by lenders to render a value opinion on real estate involved in a loan transaction - to make sure the real estate is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does REID E. CHOATE & ASSOCIATES, LLC get the data used to estimate values in Hawaii County or other areas?   (Return to top)

Collecting data is one of the primary tasks an appraiser performs. Data can be split into Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often have to report when a property is in a flood zone, so 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 past experience in creating appraisals for other houses in the same market.


How can a licensed appraiser help me?   (Return to top)

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. For those settling an estate or divorce, an appraisal from REID E. CHOATE & ASSOCIATES, LLC is the best way to ensure assets are divided evenly. A house 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?   (Return to top)

PMI stands for Private Mortgage Insurance. This added policy covers the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than what is owed on the loan. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Did you have less than 20% to put down on your mortgage? Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238 to see if you can cancel your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal appointment   (Return to top)

The first step in most appraisals is the home inspection. 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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house . Trim any landscaping and relocate any items that would make it difficult to measure the structure. On the inside, make sure we can easily access appliances like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • A list of any personal property that will be left behind and sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any 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 bill for your most recent real estate taxes which should also contain a legal description of the property.

What does "Market Value" mean?   (Return 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?   (Return to top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 bundled with all the other closing documents - but is not allowed 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 cases, 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 use the appraisal for any purpose.


How can I get the most ROI out of home improvements?   (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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 weren't far behind, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become atypical for your neighborhood in terms of size.

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