New Mexico Appraisal Group has answers to "Frequently Asked Questions"


	New Mexico Appraisal Group is willing to elaborate on any inquiries you might have about appraisals or real estate in Rio Rancho and Sandoval County. Contact New Mexico Appraisal Group today to see how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to request your services?
What is the difference between an appraisal and a home inspection?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What does the appraisal report contain?
After completing the report, how can I have confidence that the value conclusion is veritable?
How hard is it to become certified?
Who are an appraiser's customers?
Where does New Mexico Appraisal Group get the data used to estimate values in Sandoval County or other areas?
How can a licensed appraiser help me?
My mortgage statement has an item on it for PMI? Can I get rid of that?
How do I get ready for the appraiser?
What does "Market Value" mean?
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?

Define the term "Appraisal" (Back to top)

The process of producing an appraisal report consists of an estimation which leads to an opinion of value. There are three "common approaches to value" which assists the appraiser arrive at this opinion or valuation. One of the methods in use is the Cost Approach, which finds what it would cost to replace the improvements to the home, less the age and physical dilapidation, adding the land value. The Sales Comparison Approach involves finding comparable homes nearby and discovering the value based on making a comparison of those houses to the house in question. The Sales Comparison Approach is commonly the most accurate and best indicator of a liklely sales price 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.

What does an appraiser do? (Back to top)

An appraiser offers an unbiased and well substantiated opinion of market value, often in the context of a real estate sale. Appraisers illustate their expert investigation in appraisal reports.

What would cause me to request your services? (Back to top)

There are many reasons to purchase an appraisal from New Mexico Appraisal Group with the usual reason being real estate and mortgage transactions. Other reasons for getting an appraisal include:

If you are applying for a loan.
To reduce your property taxes.
To show a homeowner has 30% equity and remove PMI.
To fight inflated property taxes.
To deal with an estate.
To give you a leg-up when purchasing a home.
To figure out the most probable property value when listing your home.
To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
Because an official agency such as the IRS requires it.
If you are ever involved in a lawsuit.

Click here for a more detailed explanation of the process of getting an appraisal.

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

The appraiser is not a home inspector and does not do a complete home inspection. A third-party home inspector will evaluate the structure of the property, from the roof to the foundation. The stereotypical house inspector's report will contain an evaluation of the integrity of the property's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and accessible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

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

Frankly, it's apples and oranges. The CMA relies on indefinite trends in the market. An appraisal utilizes comparable sales that can be validated by public record. The appraisal report will also include area and building prices. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

Who's behind the report is frankly 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. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an independent voice, 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 does the appraisal report contain? (Back to top)

Each report must demonstrate a credible estimate of value and will clearly state the following:

The client and whose purposes the appraisal is to serve.
The intended use of the appraisal.
The purpose of the appraisal.
Precisely what "value" attribute is being reported and what that value means.
The effective date of the appraisal.
Relevant property characteristics, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible factors.
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 used while working up the assignment.

For a more in depth view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, how can I have confidence that the value conclusion is veritable? (Back to top)

In the documentation of an appraisal, each appraiser must make sure of the following:

The appraisal used a suitable analysis of the information.

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

That appraisal services were rendered in a careful and cognizant manner.

That a solid, defensible appraisal report was conferred.

To become a state licensed appraiser, we must fulfill intense education and experience requirements that train us to produce an unbiased opinion. Plus, appraisers must stick to a strict industry code of ethics and comply with national standards of practice for real estate appraisal. The tenets 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 vary from state to state. However, licensing and certification is most often associated with many hours of classroom study, tests and real world experience. Once an appraiser is licensed, he or she must then take 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)

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

Where does New Mexico Appraisal Group get the data used to estimate values in Sandoval County or other areas? (Back to top)

One of the primary tasks an appraiser engages in is to compile data. Data can be categorized as either Specific or General. Specific data is gathered from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser during an inspection.

General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that could be used as comparables. To verify actual sales prices, we look at items in the assessor's office and other public documents. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood product.

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

How can a licensed appraiser help me? (Back to top)

An appraisal is a valuable tool anytime the value of your home is pertinent to some financial decision. If you're selling your house, an appraisal will help you determine the most appropriate price. When buying, you can avoid overpaying by commissioning an independent appraisal. For parties settling an estate or divorce, an appraisal from New Mexico Appraisal Group is the best documentation to ensure assets are split up evenly. A house is often the single, largest financial asset anybody owns. Knowing its true value means you can make wise financial decisions.

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

PMI is short for for Private Mortgage Insurance. This supplemental plan covers the lender if a borrower doesn't pay 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.


	Did you have less than 20% to put down on your mortgage? Contact New Mexico Appraisal Group today at 505 896-1921 to see if you can cancel your Private Mortgage Insurance premium.

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

We start with an inspection of the property. 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 status of its amenities. Inside, make sure it is clutter free and that we can access things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of outside walls.

The following items, if available, will help your appraiser to provide a more accurate appraisal in a shorter period of time:

Information on any written private agreements, such as a shared driveway with a neighbor.
Title policy that lists encroachments or easements.
Home inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and wells.
A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".
A bill for your most recent real estate taxes which should also contain a legal description of the property.

What does "Market Value" mean? (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."

Once complete, who actually owns 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 certainly 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 cases, the appraiser may stipulate the purpose of the appraisal; 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.

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

The added value of a particular amenity truly depends on the local market. 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 most value returned from renovating a home comes in the kitchen. 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, 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 overbuilt for your neighborhood in terms of size.