Lone Pine Appraisals, Inc. has answers to "Frequently Asked Questions"

Lone Pine Appraisals, Inc. is prepared to reply to any questions you might have about appraisals or real estate in Teller County. Contact us today to see how we can help solve your specific valuation problems.

What is an appraisal?
What does an appraiser do?
Why would I need your services?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the report has been delivered, what guarantee is there that the final number is trustworthy?
What are the requirements to be a certified appraiser?
Who engages the services of appraisers?
Where does an appraiser get the data used to estimate values in Teller County or other areas?
Why should I hire a licensed appraiser?
What exactly is PMI and how can I get rid of it?
Does the appraiser need anything from the homeowner in advance?
What does "Market Value" mean?
Who actually owns the appraisal report?
How can I get the most ROI out of home improvements?



What is an appraisal?   (List of questions)

The method of performing an appraisal report consists of an investigation which leads to an opinion of value. The real estate appraiser will typically use a number of "approaches," typically three, to draw up the estimation of market value. One of them is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the processes is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close proximity which have recently sold. Being the most common approach, the Sales Comparison Approach is considered the most precise and best indicator of market value for a residential property. One of the least common approaches in appraising houses is the Income Approach, which is mainly used to figure the value of a property based on what an investor would pay based on the income produced by the property.

What does an appraiser do?   (List of questions)

An appraiser forumlates a professional, unbiased opinion of market value, often in the context of a real estate exchange. Appraisers present their professional findings in appraisal reports.


Why would I need your services?   (List of questions)

There are a lot of reasons to order an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an report include:
  • If you are applying for a loan.
  • If you would like to lower your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To challenge high property taxes.
  • To handle an estate.
  • To provide you an edge when purchasing real estate.
  • To determine the most probable price when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • If you ever find yourself in a civil case.
If you need more information regarding the appraisal process, please click here.


What is the difference between an appraisal and a home inspection?   (List of questions)

Home inspectors do not come to an opinion of value and do not use the same forms as appraisers. A third-party home inspector will inspect the structure of the property, from the roof to the foundation. Usually, a home inspection report will explain 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 visible structures.

Is an appraisal the same as a comparative market analysis(CMA)?   (List of questions)

Frankly, it's like comparing broadband and dial-up. The CMA relies on indistinct trends in the market. Appraisals use comparable sales which are valid resources. Also, the appraisal checks other factors like condition, area and construction prices. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is hands down the most significant 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 work they perform, regardless of their outcome.

What can I expect to see in my appraisal report?   (List of questions)

The main objective of an appraisal report is to give a value opinion, 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 report.
  • The purpose of the appraisal.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, 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 included in the activity of completing the assignment.
For a more detailed look at what goes into an appraisal report click here: Sample Appraisal Report

Once the report has been delivered, what guarantee is there that the final number is trustworthy?   (List of questions)

In communicating an appraisal report, 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 significant errors contained in the report, nor any relevant details left out.

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

  • The final appraisal report was clear, legitimate and not easily discredited.
There are intense education and on the job experience requirements that must be fulfilled in order to achieve the status of "licensed appraiser" in Colorado. Likewise, appraisers must abide by a meticulous industry code of ethics and observe 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).


    (List of questions) Licensing and certification takes classroom study, tests and practical experience. Once an appraiser is licensed, he/she is required to complete continuing education courses so the license stays current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (List of questions)

Typically, appraisers are employed by lenders to estimate the value of a house involved in a loan transaction - to make sure the real estate is truly adequate collateral for the loan. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does an appraiser get the data used to estimate values in Teller County or other areas?   (List of questions)

One of the primary tasks an appraiser must accomplish is to compile data. Data can be classified as either Specific or General. Specific data is from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is received from a many places. Local Multiple Listing Services (MLS) have information on recently sold homes that could be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. 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 product.

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

Why should I hire a licensed appraiser?   (List of questions)

If you're involved in any kind of financial decision and the value of your home is relevant, you'll want to hire a licensed appraiser. For those selling a home, you'll want to determine the price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from Lone Pine Appraisals, Inc. is the best way to ensure assets are divided fairly. Simply put, a house is often the single, largest financial asset anybody owns. Knowing its true value means you can make the right financial decisions.

What exactly is PMI and how can I get rid of it?   (List of questions)

PMI stands for Private Mortgage Insurance. This added plan covers the lender in case a borrower doesn't pay on the loan and the value of the house is less than what the borrower still owes on the loan. 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? Contact Lone Pine Appraisals, Inc. today at (719) 748-0120. You may be able to save money by removing your Private Mortgage Insurance payment.

Does the appraiser need anything from the homeowner in advance?   (List of questions)

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. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. In the yard, trim any bushes so we can be free to get an accurate measurement of outside walls.

To help expedite our work as well as ensure a more accurate report, attempt if possible to have the following items:
  • A plot plan or survey of the house and land (if readily available).
  • Any paperwork, such as a title policy with information on encroachments or easements encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (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."

Who actually owns the appraisal report?   (List of questions)

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 certainly 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.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these scenarios, the appraiser may state 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.

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

The answer to this is different depending upon the location of the home. 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. 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 weren't far behind, returning 85%. On the contrary, an improvement that may not increase your value would be painting just for the sake of redecorating.