Darrel Clark & Associates, Inc. has answers to "Frequently Asked Questions"

Darrel Clark & Associates, Inc. is always willing to elaborate on any questions you might have about appraisals in Utah County. Contact us today to see how we can help solve your valuation problems.

What is an appraisal?
What does an appraiser do?
What would cause me to require 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 can I expect to see in my appraisal report?
Once the appraisal has been completed, what guarantee is there that the final number is accurate?
How are appraisers certified?
Who engages the services of appraisers?
Where does Darrel Clark & Associates, Inc. get the information used to estimate values in Utah 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?
Does the appraiser need anything from me in advance?
What is "Market Value?"
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



What is an appraisal?   (Top)

An appraiser performs an estimation that produces an opinion of value. The real estate appraiser will use a few "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the home, minus age and physical dilapidation, plus the land value. The Sales Comparison Approach deals with finding similar houses in close proximity and figuring out the value based on comparing those homes to the house being investigated. The Sales Comparison Approach is normally the most definitive and best indicator of value for a home. One of the least common approaches in appraising homes is the Income Approach, which is mainly used to find the value of a property based on what an investor would pay based on the income produced by the building.

What does an appraiser do?   (Top)

An appraiser provides a professional, unbiased opinion of market value, to be used in making real estate transactions. Appraisers illustate their professional findings in appraisal reports.


What would cause me to require a real estate appraisal?   (Top)

There are a lot of reasons to purchase an appraisal from Darrel Clark & Associates, Inc. with the usual reason being real estate and mortgage transactions. Some other reasons for obtaining an report include:
  • To receive a loan.
  • If you would like to lower your property tax obligations.
  • To show a homeowner has 30% equity and remove Primary Mortgage Insurance.
  • To fight improperly assessed property taxes.
  • To settle an estate.
  • To give you an edge when purchasing a home.
  • To figure out a likely price when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every home.
  • If you are ever involved in a lawsuit.
For a more detailed explanation of the appraisal process click here.


What is the difference between an appraisal and a home inspection?   (Top)

The appraiser is not a home inspector nor does he/she do a comprehensive home inspection. The purpose of a home inspection is to evaluate the structure of the property from basement to attic. The standard house inspector's report will include an evaluation of the integrity of the house's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

Is an appraisal the same as a comparative market analysis(CMA)?   (Top)

Frankly, it's like comparing broadband and dial-up. The CMA relies on vague trends in the market. The appraisal depends on similar verifiable comparable sales. Also, the appraisal verifies other factors like condition, neighborhood and replacement costs. All a CMA does is generate a "ball park figure." Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The person creating the report is actually the most significant difference between a CMA and an appraisal. Real estate agents write CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. A certified, Utah licensed professional who made their livelihood on valuing homes in and around Utah County creates the appraisal. Moreover, the appraiser is an unbiased party, with no conditional interest in the property's value, unlike the real estate agent, whose income is tied to the value of the home.

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

The main purpose of an appraisal report is to let the reader know the value of the real estate in question, and depending on the scope of the report, one will customarily see the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.
  • Pertinent property characteristics, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the appraisal, 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 when completing the assignment.
For a more comprehensive view of all that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been completed, what guarantee is there that the final number is accurate?   (Top)

In communicating an appraisal report, each appraiser must make sure of the following:
  • That the information analysis utilized in the appraisal was proper.

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

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

  • That a believable, substantiated appraisal report was imparted.
To become a state licensed appraiser, we must meet intense education and experience requirements that train us to produce an unbiased opinion. In addition, appraisers must follow a meticulous industry code of ethics and observe national standards of practice for real estate appraisal. The rules for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Top) Licensing and certification is achieved through classroom study, tests and experience working under a supervisor. Once an appraiser is licensed, he or she is required to engage in continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Top)

Typically, appraisers are employed by mortgage lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does Darrel Clark & Associates, Inc. get the information used to estimate values in Utah County or other areas?   (Top)

Compiling data is one of the primary tasks an appraiser engages in. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are documented by the appraiser while on site.

General data is gathered from a variety of places. To look up recently sold homes to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood servers.

And last but not least, the appraiser gathers general data from his or her collective knowledge gained from creating appraisals for other properties in the same market.


Why should I hire a licensed appraiser?   (Top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your house, an appraisal will help you determine the most appropriate price. 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 house is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.


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

PMI stands for Private Mortgage Insurance. It guards the lender in the event a borrower defaults on the loan and the market price of the house is lower than the loan balance. You can have your PMI dropped once you've achieved 20% equity in your home through appreciation and principal payments.

The money you keep from cancelling the PMI required when you got your mortgage pays for the appraisal in no time. Darrel Clark & Associates, Inc. stays current with value trends in Mapleton and Utah County. Contact us today.

Does the appraiser need anything from me in advance?   (Top)

The first step in most appraisals is the property inspection. 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 landscaping and relocate any items that would make it difficult to measure the structure. Indoors, make sure we can easily access 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:
  • A plot plan or survey of the house and land (if readily available).
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as an oven, or a washer and dryer, if applicable.
  • Any "Homeowners Associations" agreements or, if applicable, condo agreements or fees .
  • A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
  • Most recent real estate tax bill and or legal description of the property.

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."



Does the appraisal belong to the bank or the consumer?   (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 bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner engages an appraiser directly. 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 stipulated otherwise, the home owner can use the appraisal for any purpose.


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

The answer to this is different depending upon the location of the home. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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 were second, yielding 85%. On the contrary, something that may not add value would be painting just for the sake of redecorating.