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

REID E. CHOATE & ASSOCIATES, LLC is willing to elaborate on any concerns you might have about appraisals or real estate in Pahoa and Hawaii County. Feel free to contact us today.

Describe an appraisal
Describe what an appraiser does
What are the reasons someone would need services from REID E. CHOATE & ASSOCIATES, LLC?
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 report is done, how can I have certainty that the value conclusion is valid?
How difficult is it to become certified?
Who are an appraiser's customers?
Where does REID E. CHOATE & ASSOCIATES, LLC get the data used to estimate values in Hawaii County or other areas?
What can a full appraisal do for me?
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"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Back to top)

An appraisal report is an estimation allowing the appraiser to come to an opinion of value. The real estate appraiser will typically use a several "approaches," typically three, to arrive at the estimation of market value. The Cost Approach is one of the processes that appraisers use to find value; it involves figuring what the improvements would cost minus physical depreciation, adding the land value. The Sales Comparison Approach deals with searching for comparable houses nearby and finding value based on making a comparison of those prior sales to the property in question. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. 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 money produced by the property.

Describe what an appraiser does   (Back to top)

An appraiser offers an unbiased and well substantiated opinion of market value, to be used in making real estate transactions. Appraisers summarize their professional analysis in appraisal reports.


What are the reasons someone would need services from REID E. CHOATE & ASSOCIATES, LLC?   (Back to top)

There are many reasons to obtain an appraisal from REID E. CHOATE & ASSOCIATES, LLC with the usual reason being real estate and mortgage transactions. A few other reasons for getting an report include:
  • If you are applying for 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 deal with an estate.
  • To offer you an edge when purchasing real estate.
  • To determine an honest sales price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every house.
  • It's possible you could be involved in a lawsuit - an appraisal will help.
For a more detailed explanation of the appraisal process click here.


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

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. A third-party home inspector will inspect the structure of the house, from the top to the bottom. The usual home inspector's report will include an evaluation of the condition of the house's heating system, 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.

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

To be honest, they have nothing in common. The CMA uses market trends to create most of their business. The appraisal depends on similar valid comparable sales. The appraisal report will also contain location and construction values. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person behind the report is actually the biggest 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. A certified, state licensed professional who made a career on valuing homes in and around Hawaii County creates the appraisal. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their value conclusion.

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

The main purpose of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • Relevant property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • Any 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 to complete the appraisal.
For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report


Once the report is done, how can I have certainty that the value conclusion is valid?   (Back to top)

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

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

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

  • The final appraisal report was transparent, legitimate and not easily discredited.
To become a state licensed appraiser, we must meet considerable education and experience requirements that train us to formulate an unbiased opinion. Plus, appraisers must abide by a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The guidelines for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Back to top) Regulations regarding licensing and certification are different from state to state. However, licensing and certification typically translates to many hours of coursework, tests and practical experience. Once licensed, he/she must then take 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?   (Back to top)

Commonly, appraisers are hired by mortgage lenders to estimate the value of property involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

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

One of the primary activities of an appraiser is to collect 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 noted by the appraiser while on site.

General data is collected from a variety of sources. To look up recent sales to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood system.

And most importantly, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


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

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal will help you determine 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 REID E. CHOATE & ASSOCIATES, LLC is the best documentation to ensure assets are split up fairly. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


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

PMI is short for for Private Mortgage Insurance. PMI 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. 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.

Has your home value appreciated since you first purchased? Contact REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238 to see if you can save money by removing your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal inspection   (Back to top)

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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any shrubs and move any items that would get in our way while we measure the structure. Indoors, make sure we can easily access items like furnaces and water heaters.

You can make the inspection 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 available).
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Brag sheet that lists major home improvements and upgrades, 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).
  • Most recent real estate tax bill from Hawaii and or legal description of the property.

Define "Market Value"   (Back to top)

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 has rights to the appraisal report?   (Back to top)

For mortgage transactions, the lender orders the appraisal, either directly or through a third party. 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 included 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 scenarios, the appraiser may stipulate how the appraisal can be used; 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.


Are some home improvements more worthwhile than others?   (Back to top)

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 best ROI 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 are right up there with kitchens, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.

Got a Question?

Do you have a question relating to real estate appraisals? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question