Craig A. Nixon Appraisals has answers to "Frequently Asked Questions"

Craig A. Nixon Appraisals is ready to address any questions you might have about appraisals in Elk Grove and Sacramento County. Contact us today to learn how we can help solve your valuation problems.

Describe an appraisal
What does an appraiser do?
What are the reasons a person would need your services?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the report, what assurance is there that the final number is veritable?
What goes into an appraiser's certification?
Who hires an appraiser?
Where does Craig A. Nixon Appraisals get the data used to estimate values in Sacramento County or other areas?
Why should I hire a licensed appraiser?
My mortgage statement has an item on it for PMI? Can I get rid of that?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



Describe an appraisal   (Top)

An appraisal report is a thought process that concludes with an opinion of value. The appraiser must use a few "approaches," typically three, to come to the estimation of market value. The Cost Approach is one of the methods that appraisers use to find the value of a house; it involves finding what the improvements would cost without physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns discovering a comparable analysis to other similar properties within a close vicinity which have recently sold. Being the most commonly used approach, the Sales Comparison Approach is considered the most accurate and best indicator of market value for a house. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property would bring in.

What does an appraiser do?   (Top)

An appraiser produces an unprejudiced and well justified determination of market value, often in the context of a real estate sale. Appraisers present their expert analysis in appraisal reports.


What are the reasons a person would need your services?   (Top)

There are a lot of reasons to obtain an appraisal from Craig A. Nixon Appraisals with the most common reason being real estate and mortgage transactions. Some other reasons for ordering an report include:
  • To get a loan.
  • To lower your tax burden.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To contest inflated property taxes.
  • To handle an estate.
  • To provide you an edge when purchasing real estate.
  • To determine a reasonable sales price when selling real estate.
  • To protect 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 be involved in a lawsuit - an appraisal will help.
For a more detailed description of the appraisal process click here.


How is an appraiser different than a home inspector?   (Top)

The appraiser is not a home inspector and does not do a full home inspection. An inspection is a third-party evaluation of the available structure and systems of a property, from the top to the bottom. Generally, a home inspection report will evaluate the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity of the home such as the attic, visible insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Honestly, they share nothing in common. The CMA uses market trends to create most of their business. The appraisal is reliant on similar proven comparable sales. Location and architectural values are also precedent in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the largest differentiator is the person creating the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. 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 collect only a previously agreed upon fee for work they perform, regardless of their value conclusion.

What does the appraisal report contain?   (Top)

Each appraisal should indicate a believable value opinion and will document the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The purpose of 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!)
  • Pertinent property attributes, including: location, physical attributes, legal attributes, economic factors, the property rights in question, and non-real estate items included in the valuation, such as personal property, permanent equipment installations and even intangible items.
  • 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 while working up the assignment.
For a more comprehensive view of what goes into an appraisal report click here: Sample Appraisal Report


After completing the report, what assurance is there that the final number is veritable?   (Top)

In the documentation of an appraisal, each appraiser must see to it that each of the items below are covered:
  • The appraisal used an apropos analysis of the data.

  • Whether individually or collectively, there were no grave errors contained in the appraisal, nor any material details left out.

  • That appraisal services were delivered in a careful and cognizant manner.

  • The final appraisal report was easy to explain, credible and not easily discredited.
There are intense classroom and on the job experience requirements that must be adhered to in order to achieve the title of "licensed appraiser" in California. In addition, appraisers must stick to a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification is most often associated with many hours of coursework, tests and practical experience. Once licensed, he/she is required to engage in continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who hires an appraiser?   (Top)

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

Where does Craig A. Nixon Appraisals get the data used to estimate values in Sacramento County or other areas?   (Top)

Collecting data is one of the primary things an appraiser does. Data can be divided into Specific or General. Specific data is from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is received from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we research 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, 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 collective knowledge gained from creating appraisals for other houses in the same market.


Why should I hire a licensed appraiser?   (Top)

If you're making some sort of financial decision and the value of your home is relevant, you'll want an appraisal. If you're selling your home, an appraisal helps you set the most appropriate price. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Craig A. Nixon Appraisals is the best way to ensure assets are divided evenly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making informed financial decisions.


My mortgage statement has an item on it for PMI? Can I get rid of that?   (Top)

PMI is short for for Private Mortgage Insurance. This supplemental plan guards the lender in the event a borrower is unable to pay on the loan and the market price of the house 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.

The savings from cancelling your PMI will make up for the price of the appraisal in a matter of months. Craig A. Nixon Appraisals is a name you can trust when it comes to real estate value trends in Elk Grove and Sacramento County. Contact us today.

Should I do anything in advance of the appraisal appointment   (Top)

We begin with an inspection of the home. 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. Inside, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of exterior walls.

You can make our visit 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 readily available).
  • A list of any personal property that will be left behind and sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • A list of "suggested" improvements if the property is to be appraised "as complete".

What is "Market Value?"   (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?   (Top)

For mortgage transactions, the lender requests 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 entitled to a copy of the appraisal - 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 engages an appraiser directly. In these situations, the appraiser may state the purpose of the appraisal; 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?   (Top)

The added value of a particular amenity truly depends on the local market. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

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 are right up there with kitchens, yielding 85%. On the contrary, work that may not increase your value would be painting just for the sake of redecorating.