Cambridge Valuation has answers to "Frequently Asked Questions"

Cambridge Valuation is ready to answer any concerns you might have about appraisals in Bronx, Westchester, and Rockland Counties. Don't hesitate to contact us today.

What is an appraisal?
Describe what an appraiser does
What are the reasons I would require services from Cambridge Valuation?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What does the appraisal report contain?
Once the assignment is done, what assurance 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 Cambridge Valuation get the data used to estimate values in Kings County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
Define "Market Value"
Who has rights to the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Back to top)

The method of producing an appraisal report deals with an evaluation which forms an opinion of value. The appraiser will typically use a few "approaches," typically three, to conclude the estimation of market value. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, less physical deterioration and other factors, then adding the land value. The Sales Comparison Approach deals with searching for similar homes in the vicinity and discovering the value based on making a comparison of those prior sales to the property in question. The Sales Comparison Approach is commonly the most accurate and clearest indicator of value for a home. The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the money generated by the property.

Describe what an appraiser does   (Back to top)

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


What are the reasons I would require services from Cambridge Valuation?   (Back to top)

There are many reasons to order an appraisal from Cambridge Valuation with the usual reason being real estate and mortgage transactions. Some other reasons for purchasing an appraisal report include:
  • To receive a loan.
  • To lower your property taxes.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove PMI.
  • To challenge inflated property taxes.
  • If you need to take care of an estate.
  • To offer you a leg-up when purchasing real estate.
  • To find a likely property value when listing your home.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because a government agency such as the IRS requires it.
  • If you are ever involved in a civil case.
Click here for a more detailed explanation of the process dealing with getting an appraisal.


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

The appraiser is not a home inspector nor does he/she do a full home inspection. An inspection is a third-party evaluation of the accessible structure and electrical and mechanical systems of a home, from the roof to the foundation. Usually, a home inspection report will discuss the amenities and the necessities 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 other visible structures.

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

Frankly, it's like comparing opera to country. The CMA relies on vague trends in the market. An appraisal is based on comparable sales that can be validated by public record. Area and construction costs are also precedent in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the most significant factor is who's behind the report. Real estate agents, who may not have a true grasp of valuation methods or the entire market, write CMA's. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Further, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, whose income is tied to the price of the home.

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

Every report should reflect a supported value opinion and will identify the following:
  • The client and other intended users.
  • The intended use of the report.
  • The reason for the assignment.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraisal.
  • Relevant property characteristics, including: location, physical characteristics, 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.
  • All 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.
  • What was entailed in the activity of completing the job.
For a more detailed view of what goes into an appraisal report click here: Sample Appraisal Report


Once the assignment is done, what assurance is there that the final number is trustworthy?   (Back to top)

In the documentation of an appraisal, each appraiser must ensure the following:
  • That the information analysis utilized in the appraisal was suitable.

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

  • That appraisal services were done in a careful and conscientious manner.

  • That a trustworthy, defensible appraisal report was conferred.
To become a state licensed appraiser, there are intense education requirements as well as practical experience that must be attained - all with the end goal of being able to render unbiased value opinions. Plus, appraisers must stick to a stringent industry code of ethics and respect 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).


   (Back to top) Licensing and certification is achieved through coursework, tests and practical experience. Once licensed, he or she must then engage in continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (Back to top)

Commonly, appraisers are hired by lenders to estimate the value of property involved in a loan transaction. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does Cambridge Valuation get the data used to estimate values in Bronx County or other areas?   (Back to top)

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

General data is gathered from a numerous places. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

And last but not least, the appraiser gathers 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 worthwhile whenever the value of your home is pertinent to a financial decision. If you're selling your house, an appraisal helps you set the most appropriate price. When buying, be sure you're not overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.


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

PMI stands for Private Mortgage Insurance. PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the home is less 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.

Is PMI a part of your monthly house payment?Call Cambridge Valuation today at (718) 222-0999 or send us an e-mail. A current appraisal could save you thousands.

Should I do anything in advance of the appraisal appointment   (Back to top)

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 amenities. Is there anything you can do to help? Yes there is! First, be sure we have easy access to the exterior of the house . Trim any bushes and relocate any items that would get in our way while we measure the structure. On the inside, make sure we 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:
  • A plot plan or survey of the house and land (if 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.
  • Any documents, such as a title policy with information on encroachments or easements encroachments or easements.
  • Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and your well.
  • Locate copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

Define "Market Value"   (Back to 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?   (Back to top)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. 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 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.

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


Are some home improvements more worthwhile than others?   (Back to top)

Like all things real estate, this is dependent on a home's location. 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

As a rule, the best ROI from renovating a home comes in the kitchen. 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%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.