profile picture

Sierra Shadows Appraisal Service has answers to "Frequently Asked Questions"

Sierra Shadows Appraisal Service is willing to address any questions you might have about appraisals or real estate in Reno and Washoe County. Contact us today to talk about how we can help solve your valuation problems.

What is an appraisal?
Describe what an appraiser does
Why would someone need your services?
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?
Upon completion of the appraisal, how can I have certainty that the final number is accurate?
What does it mean for an appraiser to be licensed?
Who engages the services of appraisers?
Where does Sierra Shadows Appraisal Service get the data used to estimate values in Washoe County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
Should I do anything in advance of the appraisal appointment
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Are some home improvements more worthwhile than others?



What is an appraisal?   (Go to list of  questions)

The process of producing an appraisal consists of an evaluation which forms an opinion of value. There are three "common approaches to value" which helps the appraiser conclude this opinion or estimate. The Cost Approach is one of the processes that real estate appraisers use to find value; it involves discerning what the improvements would cost minus physical deterioration, adding the land value. Easily the most common approach in figuring the value of a home is the Sales Comparison Approach which concerns concluding a comparison to similar houses nearby. Being the most popular approach, the Sales Comparison Approach is generally the most accurate and best indicator of market value for a property. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the capital generated by the property.

Describe what an appraiser does   (Go to list of  questions)

An appraiser provides an objective and well justified determination of market value, in the support of real estate transactions. Appraisers illustate their professional investigation in appraisal reports.


Why would someone need your services?   (Go to list of  questions)

There are a lot of reasons to get an appraisal with the usual reason being real estate and mortgage transactions. A few other reasons for obtaining an appraisal report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax obligations.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To challenge high property taxes.
  • If you need to settle an estate.
  • To provide you an edge when purchasing a home.
  • To figure out an honest sales price when selling real estate.
  • 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 lawsuit.
Click here for a more extensive explanation of the process about getting an appraisal.


How is an appraisal different than a home inspection?   (Go to list of  questions)

The appraiser is not a home inspector and he or she does not do a comprehensive home inspection. An inspection is a third-party investigation of the livable structure and appliances of a house, from the roof to the foundation. Usually, a home inspection report will evaluate the amenities and the necessities of the property: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural capacity 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)?   (Go to list of  questions)

To be honest, they share nothing in common. The CMA uses market trends to conduct most of their business. Appraisals use similar sales which are valid resources. Location and building values are also important in an appraisal. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The person behind the report is frankly the most significant difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, generate CMA's. A certified, Nevada licensed professional who made a career on valuing properties in and around Washoe County is behind the appraisal. Further, the appraiser is an independent party, with no conditional interest in the value of a home, unlike the agent, whose income is tied to the price of the home.

What does the appraisal report contain?   (Go to list of  questions)

Each appraisal must demonstrate a believable value opinion and will document the following:
  • The client and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the assignment.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Pertinent property attributes, including: location, physical characteristics, legal attributes, economic attributes, the real property interest 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 the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work used to complete the appraisal.
For a more detailed view of all that goes into an appraisal report click here: Sample Appraisal Report


Upon completion of the appraisal, how can I have certainty that the final number is accurate?   (Go to list of  questions)

In communicating an appraisal report, each appraiser must ensure the following:
  • The appraisal used an apropos analysis of the data.

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

  • That appraisal services were done in a careful and judicious fashion.

  • That a trustworthy, substantiated appraisal report was communicated.
To become a state licensed appraiser, we must fulfill extensive education and experience requirements that enable us to produce an unbiased opinion. Likewise, appraisers must obey a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Go to list of  questions) Licensing and certification requires classroom study, tests and real world experience. Once an appraiser is licensed, he/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?   (Go to list of  questions)

Commonly, appraisers are employed by lenders to estimate the value of property involved in a loan transaction. Attorneys and CPAs also retain the services of appraisers for asset division and estate settlements.

Where does Sierra Shadows Appraisal Service get the data used to estimate values in Washoe County or other areas?   (Go to list of  questions)

One of the primary things an appraiser does is to compile data. Data can be split into Specific or General. Specific data is taken from the property itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is collected from a numerous sources. To look up recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers routinely need to report when a property is 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 collective knowledge gained from creating appraisals for other properties in the same market.


What can a full appraisal do for me?   (Go to list of  questions)

An appraisal is a valuable tool anytime the value of your home is relevant to some financial decision. 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 home is often the single, largest financial asset anybody owns. Without knowing its real value, wise financial decisions are impossible.


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

PMI is an acronym for Private Mortgage Insurance. PMI takes care of the lender if a borrower defaults on the loan and the market price of the home is lower 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.

The amount you keep from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. Sierra Shadows Appraisal Service is in the business of tracking real estate value trends in Reno and Washoe County. Contact us today.

Should I do anything in advance of the appraisal appointment   (Go to list of  questions)

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. The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can easily access appliances 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).
  • Any paperwork, 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 wells.
  • Locate copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.

What is "Market Value?"   (Go to 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."



Once complete, who actually owns the appraisal report?   (Go to list of  questions)

In most real estate transactions, the appraisal is ordered by the lender. 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.

It's different when it's the homeowner hiring 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?   (Go to list of  questions)

This really depends on where the home is. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

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