G.W.B. & Associates has answers to "Frequently Asked Questions"

G.W.B. & Associates is eager to address any concerns you might have about appraisals or real estate in Santa Cruz County. Feel free to contact us today.

What is an appraisal?
Describe what an appraiser does
What would cause me to need a real estate appraisal?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What can I expect to see in my appraisal report?
After completing the appraisal, what guarantee is there that the final number is legitimate?
How difficult is it to become certified?
Who engages the services of appraisers?
Where does G.W.B. & Associates get the information used to estimate values in Santa Cruz 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?
Do you need anything from the homeowner in advance?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



What is an appraisal?   (See list of FAQ's)

An appraisal report is an inspection that concludes with an opinion of value. The appraiser will typically use a number of "approaches," typically three, to draw up the estimation of market value. One of the processes in use is the Cost Approach, which evaluates what it would cost to restore the improvements to the home, minus depreciation and physical deterioration, adding the land value. The Sales Comparison Approach involves finding similar homes in the vicinity and discerning value based on making a comparison of those homes to the house in question. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a house. The Income Approach is generally used for finding the market value of income-producing properties based on what an investor would pay based on the amount of income a property would bring in.

Describe what an appraiser does   (See list of FAQ's)

An appraiser forumlates a professional, unbiased assessment of market value, in the support of real estate transactions. Appraisers illustate their analysis in appraisal reports.


What would cause me to need a real estate appraisal?   (See list of FAQ's)

There are many reasons to get an appraisal from G.W.B. & Associates 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 tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge improperly assessed property taxes.
  • To settle an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To determine the most probable sales price when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Because an official agency such as the IRS requires it.
  • If you are ever involved in a lawsuit.
If you need more information regarding the appraisal process, please click here.


How is an appraiser different than a home inspector?   (See list of FAQ's)

Appraisers do not do complete home inspections and are not home inspectors. An inspection is a third-party evaluation of the livable structure and systems of a property, from the roof to the foundation. The archetypal home inspector's report will include an evaluation of the condition 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.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (See list of FAQ's)

Simply put, it's night and day. What the CMA depends on are superficial trends. An appraisal is based on comparable sales that can be validated by public record. Area and building values are also a priority in an appraisal. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

Who's creating the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not have a true grasp of the market or valuation concepts. The appraisal is created by a licensed, certified professional who has made a career out of valuing properties. Moreover, the appraiser is an unbiased party, with no conditional interest in the value of a home, 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?   (See list of FAQ's)

Every report must indicate a believable value opinion and will identify the following:
  • The client and other intended users.
  • The intended use of the report.
  • The purpose of the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraiser's opinions and conclusions.
  • Relevant property attributes, including: location, physical description, legal attributes, economic attributes, the real property interest valued, and non-real estate items included in the appraisal, such as personal property, trade fixtures 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.
  • What was included in the activity of completing the assignment.
For a more detailed view of the work that goes into an appraisal report click here: Sample Appraisal Report

After completing the appraisal, what guarantee is there that the final number is legitimate?   (See list of FAQ's)

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

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

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

  • The final appraisal report was clear, credible and not easily discredited.
To become a state licensed appraiser, we must satisfy extensive education and experience requirements that train us to produce an unbiased opinion. Likewise, appraisers must abide by a stringent industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (See list of FAQ's) Licensing and certification requires classroom study, tests and experience working under a supervisor. Once licensed, he or she is required to take continuing education courses in order to keep the license up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (See list of FAQ's)

Typically, appraisers are employed by mortgage lenders to render a value opinion on a home involved in a loan transaction - to make sure the property is indeed adequate collateral for the loan. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does G.W.B. & Associates get the information used to estimate values in Santa Cruz County or other areas?   (See list of FAQ's)

Compiling data is one of the primary tasks an appraiser performs. Data can be categorized as either Specific or General. Specific data is gathered from the property itself; Location, condition, amenities, size and other specific data are noted by the appraiser during an inspection.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide information on recently sold homes that could be used as comparables. To verify actual sales prices, we use items in the assessor's office and other public documents that are usually online nowadays. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood service.

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?   (See list of FAQ's)

An appraisal is a worthwhile anytime your home's value is relevant to some financial decision. For those selling a home, you'll want to figure out a price that gets you the most profit but doesn't leave your home on the market too long; an appraisal can help with that. If you're buying, it makes sure you don't overpay. For those settling an estate or divorce, an appraisal from G.W.B. & Associates is the best way to ensure assets are divided evenly. A home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.

My mortgage statement has an item on it for PMI? Can I get rid of that?   (See list of FAQ's)

PMI stands for Private Mortgage Insurance. PMI protects the lender in the event a borrower doesn't pay on the loan and the market price of the property is less than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

The savings from getting rid of the PMI required when you got your mortgage will make up for the cost of the appraisal in no time. G.W.B. & Associates is in the business of tracking value trends in Scotts Valley and Santa Cruz County. Contact us today.

Do you need anything from the homeowner in advance?   (See list of FAQ's)

We begin 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 condition of its features. On the home's interior, pick up any clutter and make sure we can find our way to things like furnaces and water heaters. On the outside, trim any bushes so we can be free to get an accurate measurement of outside walls.

You can make the inspection go faster and improve the accuracy of the appraisal report by having the following things on hand:
  • Any records on the purchase of the property for the last three years.
  • A list of any personal property that is part of the home and you intend to be sold with the home, such as a oven, or a washer and dryer, if applicable.
  • Most recent real estate tax bill from Santa Cruz and or legal description of the property.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • A list of "suggested" improvements when the property is being appraised "as complete".

What does "Market Value" mean?   (See list of FAQ's)

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?   (See list of FAQ's)

In most real estate transactions, the appraisal is ordered by the lender. 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 included with all the other closing documents - but is not allowed 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 state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

Are some home improvements more worthwhile than others?   (See list of FAQ's)

Like all things real estate, this is dependent on a home's location. For example, while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

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 were second, yielding 85%. Adding bedrooms and baths can also boost 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.