JM Real Estate Group, LLC has answers to "Frequently Asked Questions"

JM Real Estate Group, LLC is always prepared to answer any inquiries you might have about appraisals in San Clemente and Orange County. Don't hesitate to contact us today.

Describe an appraisal
What does an appraiser do?
What are the reasons I would request a real estate appraisal?
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 can I expect to see in my appraisal report?
Upon completion of the appraisal, what assurance is there that the final number is valid?
How difficult is it to become certified?
Who do appraisers work for?
Where does JM Real Estate Group, LLC get the data used to estimate values in Orange 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 inspection
How does an appraiser define "Market Value"?
Does the appraisal belong to the bank or the consumer?
How can I get the most ROI out of home improvements?



Describe an appraisal   (List of questions)

The method of producing an appraisal deals with an investigation which forms an opinion of value. The real estate appraiser will typically use a several "approaches," typically three, to draw up the estimation of market value. One of the methods in use is the Cost Approach, which is what it would cost to replace the improvements to the property, less the age and physical deterioration, plus the land value. The most common approach in finding the value of a house is the Sales Comparison Approach which deals with concluding a comparison to comparable properties close by. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a property. The Income Approach is primarily used for determining the market value of income-producing properties based on what an investor would pay based on the amount of income a property produce.

What does an appraiser do?   (List of questions)

An appraiser generates a fair and credible opinion of market value, often in the context of a real estate exchange. Appraisers summarize their analysis in appraisal reports.


What are the reasons I would request a real estate appraisal?   (List of questions)

There are a lot of reasons to purchase an appraisal from JM Real Estate Group, LLC with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To build a case for a homeowner's equity and remove insurance.
  • To challenge inflated property taxes.
  • To handle an estate.
  • To give you an edge when purchasing a home.
  • To figure out a likely property value when putting your home on the market.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • If you ever find yourself in a civil case.
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?   (List of questions)

The appraiser is not a home inspector nor does he/she do a full home inspection. A third-party home inspector will judge the structure of the home, from the roof to the foundation. The archetypal house inspector's report will contain 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 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)?   (List of questions)

Frankly, it's like comparing Shakespeare to reality TV. The CMA relies on indefinite market trends. An appraisal utilizes comparable sales that can be validated by records. The appraisal report will also include neighborhood and construction values. A CMA delivers a "ball park figure." Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The person behind the report is hands down the biggest difference between a CMA and an appraisal. Real estate agents, who may not have a complete understanding of valuation methods or the entire market, create CMA's. 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 vested interest in the value of a home, unlike the agent, whose income is tied to the value of the home.

What can I expect to see in my appraisal report?   (List of questions)

Each appraisal must indicate a believable value opinion and should document the following:
  • The client and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The appraisal's purpose.
  • The type of value contained and a definition of the value reported.
  • The effective date of the appraiser's opinions and conclusions.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the appraisal, such as personal property, permanent equipment installations and even intangible considerations.
  • Any 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 involved 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

Upon completion of the appraisal, what assurance is there that the final number is valid?   (List of questions)

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

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

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

  • That a trustworthy, defensible appraisal report was imparted.
To become a state licensed appraiser, there are education requirements as well as practical experience that must be attained. In addition, appraisers must obey a meticulous industry code of ethics and comply with national standards of practice for real estate appraisal. The rules for developing an appraisal and communicating its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (List of questions) Regulations regarding licensing and certification of Real Estate Appraisers vary from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and real world experience. Once an appraiser is licensed, he or she must then complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who do appraisers work for?   (List of questions)

Mortgage lenders are an appraiser's typical customer, requiring their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does JM Real Estate Group, LLC get the data used to estimate values in Orange County or other areas?   (List of questions)

Collecting data is one of the main things an appraiser does. Data can be categorized as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specific data are documented by the appraiser while on site.

General data is gathered from a variety of places. Local Multiple Listing Services (MLS) provide data on recently sold homes that might be used as comparables. Tax records and other courthouse documents verify actual sales prices in a market. Appraisers often 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 service.

And most importantly, the appraiser assimilates general data from his or her collective knowledge gained from creating appraisals for other houses in the same market.

Why do I need a professional appraisal?   (List of questions)

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 helps you set a price that maximizes profit and reduces time on the market. When buying, you can avoid overpaying by getting an independent appraisal. 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. Don't make decisions in the dark with a professional appraisal.

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

PMI is an acronym for Private Mortgage Insurance. This added plan covers the lender if a borrower is unable to pay on the loan and the market price of the home is lower than the loan balance. Once you can prove the amount you owe on your home is less than 80% of the home's market value, you can make a case to your lender to drop the PMI.

Did you secure your mortgage with less than 20% down? Contact JM Real Estate Group, LLC today at 714-469-7279 to see if you can cancel your Private Mortgage Insurance payment.

Should I do anything in advance of the appraisal inspection   (List of questions)

We start with an inspection of the property. During this process, the appraiser 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 . Trim any shrubs and move any items that would make it difficult to measure the structure. On the inside, make sure we can get to appliances like furnaces and water heaters.

To help speed things along as well as ensure a more accurate report, try if possible to have the following items:
  • Information on any written private easements, such as a shared driveway with a neighbor.
  • Title policy that lists encroachments or easements.
  • Information on "Homeowners Associations" or condominium covenants and fees.
  • Brag sheet that lists major home improvements and enhancements, the amount of their purchase and date of their installation (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • A list of "proposed" improvements if the property is to be appraised "as complete".

How does an appraiser define "Market Value"?   (List of questions)

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?   (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 certainly entitled to a copy of the report - it's usually bundled 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 stipulate the purpose of the appraisal; for PMI removal, or estate planning or tax challenges, for example. If not stipulated otherwise, the home owner can do whatever they want with the appraisal.

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

It really depends on the market. For example, putting in 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. 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 are right up there with kitchens, returning 85%. Adding bedrooms and baths can also help the value of your home as long as your home doesn't then become overbuilt for your neighborhood in terms of size.