Loughry Appraisal, LLC has answers to "Frequently Asked Questions"

Loughry Appraisal, LLC is always happy to answer any inquiries you might have about appraisals or real estate in Mesa County. Contact Loughry Appraisal, LLC today to talk about how we can help you with your specific valuation problems.

What is an appraisal?
What does an appraiser do?
Why would I need a real estate appraisal?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Upon completion of the appraisal, how can I have certainty that the value conclusion is trustworthy?
How hard is it to become certified?
Who are an appraiser's customers?
Where does Loughry Appraisal, LLC get the data used to estimate values in Mesa County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
Define "Market Value"
Who has rights to the appraisal report?
How can I get the most ROI out of home improvements?



What is an appraisal?   (Back to top)

An appraisal is an investigation leading to an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or valuation. One of the three is the Cost Approach - which is how much it would cost to replace the improvements, minus physical deterioration and other factors, plus the land value. The Sales Comparison Approach deals with finding comparable properties in the vicinity and discerning value based on making a comparison of those properties to the house in question. Generally speaking, the Sales Comparison Approach is the most definite indicator of market value of a residential property. One of the least common approaches in appraising homes 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 capital produced by the building.

What does an appraiser do?   (Back to top)

An appraiser forumlates a fair and credible determination of market value, in the support of real property transactions. Appraisers present their professional analysis in appraisal reports.


Why would I need a real estate appraisal?   (Back to top)

There are a lot of reasons to get an appraisal from Loughry Appraisal, LLC with the most common reason being real estate and mortgage transactions. A few other reasons for ordering an appraisal include:
  • To get a loan.
  • To lower your property taxes.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To contest improperly assessed property taxes.
  • To handle an estate.
  • To give you a leg-up when purchasing real estate.
  • To figure out the most probable sales price when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS require an appraisal on every property.
  • If you ever find yourself in a civil case.
For a more detailed description of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (Back to top)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. A third-party home inspector will judge the structure of the house, from the top to the bottom. For the most part, a home inspection report will evaluate the amenities and the requirements of the home: 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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Back to top)

Simply put, it's like comparing opera to country. What the CMA relies upon are ill-defined trends. The appraisal is based on specific definite comparable sales. Area and building prices are also important in an appraisal. The CMA will provide a non-specific figure. An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's creating the report. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. A certified, Colorado licensed professional who made their livelihood on valuing properties in and around Mesa County creates the appraisal. Further, the appraiser is an unbiased voice, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.

What does the appraisal report contain?   (Back to top)

Every appraisal should reflect a supported value opinion and should document the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The purpose of the assignment.
  • The type of value reported and a definition of the value reported.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical description, 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 considered when completing the job.
For a more comprehensive view of the work that goes into an appraisal report click here: Sample Appraisal Report

Upon completion of the appraisal, how can I have certainty that the value conclusion is trustworthy?   (Back to top)

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

  • The final appraisal report was easy to explain, credible and defensible.
To become a state licensed appraiser, we must fulfill intense education and experience requirements that enable us to formulate an unbiased opinion. Likewise, appraisers must follow a meticulous industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for developing an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (Back to top) Regulations regarding licensing and certification of Real Estate Appraisers are different from state to state. In general, licensing and certification typically translates to many hours of coursework, tests and real world 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 are an appraiser's customers?   (Back to top)

Mortgage lenders are an appraiser's typical customer, using their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Loughry Appraisal, LLC get the data used to estimate values in Mesa County or other areas?   (Back to top)

Collecting information is one of the primary roles of an appraiser. Data can be categorized as either 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 many sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. Tax records and other courthouse documents reveal actual sales prices in a market. Appraisers often 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 doing assignments for other houses in the same market.

Why do I need a professional appraisal?   (Back to top)

An appraisal is a valuable tool whenever the value of your home is pertinent to a financial decision. For those selling a home, you'll want to figure out 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. Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making wise financial decisions.

What exactly is PMI and how can I get rid of it?   (Back to top)

PMI is the common abbreviation for for Private Mortgage Insurance. This additional plan covers the lender in the event a borrower defaults on the loan and the value of the house is lower than the balance of 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 dropping your PMI pays for the appraisal in a matter of months. Loughry Appraisal, LLC stays current with value trends in Grand Junction and Mesa County. Contact us today.

How do I get ready for the appraiser?   (Back to top)

We start 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. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any shrubs and relocate any items that would get in our way while we measure the structure. On the inside, 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:
  • Any records on the purchase of the property for the last three years.
  • List of personal property to be sold with the building.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • 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 "suggested" improvements when the property is being appraised "as complete".

Define "Market Value"   (Back 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."

Who has rights to the appraisal report?   (Back 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 entitled to a copy of the report - it's usually included 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 situations, the appraiser may define 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 use the appraisal for any purpose.

How can I get the most ROI out of home improvements?   (Back to top)

This really depends on where the home is. For example, adding a central air conditioner in to a home in the South may add significant value, while putting one in a home near the Pacific Northwest might not have much impact.

No matter where you go, however, renovating a kitchen is almost always a safe investment. 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, returning 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become an oddball for your neighborhood in terms of size.