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APPRAISAL SERVICES Of HAWAII has answers to "Frequently Asked Questions"

APPRAISAL SERVICES Of HAWAII is willing to talk to you about any inquiries you might have about appraisals in Honolulu County. Feel free to contact us today.

What is an appraisal?
What does an appraiser do?
What are the reasons a person would request 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 can I expect to see in my appraisal report?
Once the appraisal has been delivered, how can I have assurance that the value conclusion is trustworthy?
What are the requirements to be a certified appraiser?
Who hires an appraiser?
Where does APPRAISAL SERVICES Of HAWAII get the information used to estimate values in Honolulu County or other areas?
How can a licensed appraiser help me?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
Which home renovations add the most to the price?



What is an appraisal?   (Return to top)

The appraisal process is an evaluation that leads to an opinion of value. The real estate appraiser must use a few "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the house, minus depreciation and physical dilapidation, adding the land value. The Sales Comparison Approach involves searching for comparable homes in the vicinity and discerning value based on making a comparison of those homes to the home being appraised. The Sales Comparison Approach is commonly the most definitive and clearest indicator of a liklely sales price for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the market value of a property based on what an investor would pay based on the capital produced by the property.

What does an appraiser do?   (Return to top)

An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers illustate their expert analysis in appraisal reports.


What are the reasons a person would request a real estate appraisal?   (Return to top)

There are many reasons to obtain an appraisal from APPRAISAL SERVICES Of HAWAII with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an report include:
  • If you are applying for a loan.
  • To lower your tax burden.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To fight inflated property taxes.
  • If you need to settle an estate.
  • To provide you a leg-up when purchasing real estate.
  • To find the most probable property value when selling your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will help.
For a more extensive explanation of the appraisal process click here.


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

Home inspectors do not produce an opinion of value and do not do appraisal reports. A third-party home inspector will judge the structure of the house, from the roof to the bottom. Commonly, a home inspection report will discuss the amenities and the necessities of the property: air conditioning (weather permitting), electrical systems, 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 other visible structures.

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

To be blunt, it's night and day. What the CMA depends on are vague trends. Appraisals use similar sales which are valid resources. Area and construction prices are also precedent in an appraisal. All a CMA does is generate a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

But the most significant factor is the person creating the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, create CMA's. A certified, Hawaii licensed professional who made their livelihood on valuing properties in and around Honolulu County creates the appraisal. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for work they perform, regardless of their value conclusion.

What can I expect to see in my appraisal report?   (Return to top)

Every report should reflect a credible value opinion and must clearly state the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Relevant property characteristics, including: location, physical characteristics, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible factors.
  • All 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.
  • The scope of work used when completing the appraisal.
For a more in depth view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been delivered, how can I have assurance that the value conclusion is trustworthy?   (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 a suitable analysis of the information.

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

  • That appraisal services were rendered in a careful and conscientious manner.

  • That a believable, substantiated appraisal report was communicated.
To become a state licensed appraiser, we must satisfy intense education and experience requirements that enable us to produce an unbiased opinion. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The tenets for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/she must then complete continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who hires an appraiser?   (Return to top)

Typically, appraisers are employed by lenders to estimate the value of real estate involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does APPRAISAL SERVICES Of HAWAII get the information used to estimate values in Honolulu County or other areas?   (Return to top)

Gathering information is one of the primary activities of an appraiser. Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser while on site.

General data is collected from a many sources. Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables. To double-check actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.


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

An appraisal is a worthwhile whenever your home's value is pertinent to a financial decision. If you're selling your home, an appraisal will help you determine the most appropriate price. If you're buying, it makes sure you don't overpay. For people settling an estate or divorce, an appraisal from APPRAISAL SERVICES Of HAWAII is the best way to ensure assets are divided properly. 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?   (Return to top)

PMI is an acronym for Private Mortgage Insurance. This supplemental policy takes care of the lender if a borrower defaults on the loan and the market price of the house is less than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

Has your real estate appreciated since you first purchased? Call APPRAISAL SERVICES Of HAWAII today at 808-533-0333 to see if you can save money by removing your Private Mortgage Insurance payment.

Do you need anything from the homeowner in advance?   (Return to top)

We start with an inspection of the property. 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. Is there anything you can do to help? Yes there is! First, be 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. On the inside, make sure we can get to appliances like furnaces and water heaters.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:
  • Any records on the purchase of the property for the last three years.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.
  • A list of "proposed" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"?   (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."



Does the appraisal belong to the bank or the consumer?   (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is entitled to a copy of the report - it's usually bundled 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 cases, the appraiser may state 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?   (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're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

No matter where you go, however, renovating a kitchen is almost always a safe move. 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%. On the contrary, something that may not add value would be painting just for the sake of redecorating.