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

REID E. CHOATE & ASSOCIATES, LLC is always happy to talk to you about any inquiries you might have about appraisals in Pahoa and Hawaii County. Contact us today to see how we can help solve your valuation problems.

Describe an appraisal
Describe what an appraiser does
What are the reasons a person would need your services?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
After completing the report, how can I have confidence that the value conclusion is veritable?
How difficult is it to become certified?
Who employs appraisers?
Where does REID E. CHOATE & ASSOCIATES, LLC get the information 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?
How do I get ready for the appraiser?
Define "Market Value"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



Describe an appraisal   (Go to list of  questions)

An appraiser provides an estimation that produces an opinion of value. This opinion or estimate is figured by using a formal process that typically uses the three main "common approaches to value". One of the methods is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, plus the land value. The Sales Comparison Approach involves finding similar homes in close proximity and finding value based on making a comparison of those homes to the house in question. Being the most common approach, the Sales Comparison Approach is generally the most precise and best indicator of market value for a house. One of the least common approaches in appraising houses is the Income Approach, which is commonly used to find the market value of a property based on what an investor would pay based on the capital produced by the building.

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

An appraiser provides a professional, unbiased assessment of market value, in the support of real property transactions. Appraisers demonstrate their professional analysis in appraisal reports.


What are the reasons a person would need your services?   (Go to list of  questions)

There are a lot of reasons to obtain an appraisal from REID E. CHOATE & ASSOCIATES, LLC with the most common reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal include:
  • To get a loan.
  • To reduce your property taxes.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To contest high property taxes.
  • If you need to settle an estate.
  • To give you an edge when purchasing a home.
  • To find the most probable price when selling your home.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • 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 full home inspection. An inspection is a third-party investigation of the available structure and mechanical systems of a home, from the roof to the bottom. The general property inspector's report will include an evaluation of the integrity 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)?   (Go to list of  questions)

Honestly, they have nothing in common. The CMA relies on indistinct local market trends. Appraisals use similar sales which are valid resources. The appraisal report will also include neighborhood and building prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's behind the report. Real estate agents produce 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 made their livelihood on valuing real estate in and around Hawaii County is behind the appraisal. Moreover, the appraiser is an unbiased voice, with no conditional interest in the value of a home, unlike the agent, whose income is tied to the price of the home.

What are the contents of an appraisal report?   (Go to list of  questions)

The main purpose of an appraisal document is to provide a value opinion, and depending on the scope of the report, you'll usually see the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • 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 characteristics, including: location, physical attributes, legal attributes, economic attributes, the real property interest valued, 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 the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was entailed in the process of completing the job.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report


After completing the report, how can I have confidence that the value conclusion is veritable?   (Go to list of  questions)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • That the information analysis utilized in the appraisal was proper.

  • That grave 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, credible and not easily discredited.
There are rigorous classroom and on the job experience requirements that must be adhered to in order to achieve the designation of "licensed appraiser" in Hawaii. In addition, appraisers must abide by a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for developing 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 of Real Estate Appraisers are different from state to state. However, licensing and certification typically translates to many hours of classroom study, tests and real world experience. Once licensed, he or she must then engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who employs appraisers?   (Go to list of  questions)

Most of the time, appraisers are called upon by lenders to render a value opinion on a house involved in a loan transaction - to make sure the real estate 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 information used to estimate values in Hawaii County or other areas?   (Go to list of  questions)

One of the main activities of an appraiser is to assimilate data. Data can be categorized as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specifics are gathered by the appraiser while on site.

General data is gathered from a variety of places. To look up recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely 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 most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other houses in the same market.


How can a licensed appraiser help me?   (Go to list of  questions)

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. When buying, you can avoid overpaying by commissioning an independent appraisal. For those settling an estate or divorce, an appraisal from REID E. CHOATE & ASSOCIATES, LLC is the best documentation to ensure assets are split up properly. 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?   (Go to list of  questions)

PMI is short for for Private Mortgage Insurance. It guards the lender in case a borrower doesn't pay on the loan and the value of the home is lower than the loan balance. 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 house payment include a fee for PMI?Call REID E. CHOATE & ASSOCIATES, LLC today at 808-965-0238 or send us an e-mail. A current appraisal could save you thousands.

How do I get ready for the appraiser?   (Go to list of  questions)

We begin with an inspection of the property. 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 amenities. On the home's interior, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:
  • Any records on the purchase of the property for the last three years.
  • Title policy that lists encroachments or easements.
  • Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

Define "Market Value"   (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."



Does the appraisal belong to the bank or the consumer?   (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 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 hiring the appraiser for things outside securing a mortgage. In these cases, 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 do whatever they want with the appraisal.


How can I get the most ROI out of home improvements?   (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

No matter where you go, however, renovating a kitchen is almost always a safe move. 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 were second, yielding 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.

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REID E. CHOATE & ASSOCIATES, LLC PO Box 388 Pahoa, HI 96778-0388
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