The Castillo Group, LLC has answers to "Frequently Asked Questions"


	The Castillo Group, LLC is more than happy to answer any concerns you might have about appraisals or real estate in Tucson and Pima County. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
Why would a person require your services?
How is an appraisal different than a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What are the contents of an appraisal report?
Once the appraisal has been completed, what guarantee is there that the value indicated is accurate?
How hard is it to become certified?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Pima County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?

What is an appraisal? (Return to top)

The process of producing an appraisal report deals with an investigation which forms an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. The Cost Approach is one of the processes that real estate appraisers use to find the value of a home; it involves finding what the improvements would cost minus physical degradation, plus the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which involves figuring a comparison to similar properties nearby. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a residential property. One of the least common approaches in appraising residential properties is the Income Approach, which is mainly used to determine the value of a property based on what an investor would pay based on the capital produced by the building.

Describe what an appraiser does (Return to top)

An appraiser provides a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers demonstrate their professional conclusions in appraisal reports.

Why would a person require your services? (Return to top)

There are a lot of reasons to get an appraisal from The Castillo Group, LLC with the most common reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:

If you are applying for a loan.
To reduce your property taxes.
To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
To fight inflated property taxes.
To handle an estate.
To provide you a negotiating tool when purchasing real estate.
To determine a reasonable sales price when selling your home.
To ensure parties are provided just compensation in eminient domain cases.
Government agencies such as the IRS require an appraisal on every home.
It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.

If you need a more detailed explanation of the appraisal process, please click here.

How is an appraisal different than a home inspection? (Return to top)

The appraiser is not a home inspector and he or she does not do a complete home inspection. A third-party home inspector will inspect the structure of the property, from the roof to the foundation. Generally, a home inspection report will evaluate the amenities and the requirements 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, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Simply put, it's like comparing Shakespeare to reality TV. What the CMA depends on are vague trends. The appraisal relies on similar valid comparable sales. Area and building values are also precedent in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

Who's behind the report is hands down the biggest difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price whereas the appraiser is bound by a code of ethics to collect only a flat sum for assignments, regardless of their outcome.

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

Every report must indicate a supported value opinion and should clearly state the following:

The client and other intended users.
How the appraisal is supposed to be used.
The reason for the assignment.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible considerations.
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.
What was involved in the process of completing the appraisal.

For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

Once the appraisal has been completed, what guarantee is there that the value indicated is accurate? (Return to top)

In communicating an appraisal report, each appraiser must make sure of the following:

The appraisal used an appropriate analysis of the data.

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

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

The final appraisal report was easy to explain, legitimate and conclusive.

To become a state licensed appraiser, we must fulfill considerable education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must stick to a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

(Return to top) Licensing and certification requires classroom study, tests and practical experience. Once licensed, he/she must then complete continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who employs appraisers? (Return to top)

Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for divorce and estate settlements.

Where does an appraiser get the information used to estimate values in Pima County or other areas? (Return to top)

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

General data is received from a numerous places. To find out about recently sold homes to be used as "comps", an appraiser will often use the local Multiple Listing Service. To verify actual sales prices, we look at tax records 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 service.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.

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

An appraisal is a worthwhile whenever the value of your home is pertinent to some financial decision. For those selling a home, you'll want to determine a 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. 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 is the common abbreviation for for Private Mortgage Insurance. This supplementary plan guards the lender in the event a borrower is unable to pay on the loan and the value of the house is lower than what the borrower still owes 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 The Castillo Group, LLC today at 520-237-4437 to see if you can cancel your Private Mortgage Insurance payment.

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

The first step in most appraisals is the home 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 amenities. 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 bushes and relocate any items that would make it difficult to measure the structure. Indoors, make sure the appraiser can get to items 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:

Information on the latest purchase of the property in the last three years.
A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
Most recent real estate tax bill from Pima and or legal description of the property.
Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
Any "Homeowners Associations" agreements or, if applicable, condo covenants or fees .

What is "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."

Once complete, who actually owns the appraisal report? (Return 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 appraisal - 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.

The exception to this rule is when a home owner engages an appraiser directly. In these cases, the appraiser may define the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

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

The added value of a particular amenity truly depends on the local market. 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. 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 (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.