McHugh Appraisal Service has answers to "Frequently Asked Questions"

McHugh Appraisal Service is always eager to answer any concerns you might have about appraisals or real estate in San Mateo County. Feel free to contact us today.

Define the term "Appraisal"
What does an appraiser do?
Why would a person need your services?
Is an appraisal the same as a home inspection?
My agent performed a CMA for me. Is that the same as an appraisal?
What's in an appraisal report?
Once the report has been completed, what guarantee is there that the value conclusion is legitimate?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does McHugh Appraisal Service get the information used to estimate values in San Mateo 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 inspection
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Define the term "Appraisal"   (Go to list of  questions)

An appraisal is an estimation leading to an opinion of value. This opinion or estimate is discerned through a formal process that commonly utilizes three "common approaches to value". One of the processes in use is the Cost Approach, which is what it would cost to replace the improvements to the home, less the age and physical deterioration, plus the land value. Easily the most common approach in finding the likely sales price of a house is the Sales Comparison Approach which concerns making a comparison to comparable houses nearby. Usually, the Sales Comparison Approach is the most accurate indicator of market value of a residential property. The third approach is the Income Approach, which is the best method in appraising income producing properties - it involves estimating what an investor would pay based on the money produced by the property.

What does an appraiser do?   (Go to list of  questions)

An appraiser provides a professional, unbiased assessment of market value, in the support of real estate exchanges. Appraisers exhibit their expert analysis in appraisal reports.


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

There are a lot of reasons to order an appraisal from McHugh Appraisal Service with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To help a homeowner realize if they owe less than 80% of their home's value and remove insurance.
  • To challenge improperly assessed property taxes.
  • To handle an estate.
  • To offer you a negotiating tool when purchasing real estate.
  • To determine an honest sales price when selling real estate.
  • To ensure parties are provided just compensation in eminient domain cases.
  • Government agencies such as the IRS need an appraisal on every property.
  • It's possible you could be involved in a lawsuit - an appraisal will definitely help.
For a more extensive description of the appraisal process click here.


Is an appraisal the same as a home inspection?   (Go to list of  questions)

Appraisers do not do perform residential property inspections and are not home inspectors. An inspection is a third-party evaluation of the accessible structure and mechanical systems of a home, from the top to the foundation. For the most part, a home inspection report will discuss the amenities and the requirements of the house: air conditioning (weather permitting), electrical functions, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, accessible insulation, walls, floors, ceilings, windows, then the foundation, basement and other visible structures.

My agent performed a CMA for me. Is that the same as an appraisal?   (Go to list of  questions)

To be blunt, it's like comparing opera to country. What the CMA relies upon are superficial trends. The appraisal is based on specific valid comparable sales. Also, the appraisal verifies other factors like condition, location and construction costs. All a CMA does is generate a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

But the biggest difference is who's doing the report. A CMA is written by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is produce by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has a vested interest in the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon sum for assignments, regardless of their outcome.

What's in an appraisal report?   (Go to list of  questions)

The main objective of an appraisal document is to let the reader know the value of the real estate in question, and depending on the scope of the report, you'll usually see the following:
  • The client and whose purposes the appraisal is to serve.
  • The intended use of the appraisal.
  • The purpose of the appraisal.
  • The type of value reported and a definition of that value.
  • The effective date of the appraisal.(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 real property interest in question, and non-real estate items included in the appraisal, such as personal property, trade fixtures and even intangible considerations.
  • 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 job.
For a more in depth look at what goes into an appraisal report click here: Sample Appraisal Report

Once the report has been completed, what guarantee is there that the value conclusion is legitimate?   (Go to list of  questions)

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

  • That significant errors of omission or commission were not committed individually or collectively.

  • That appraisal services were rendered in a careful and cognizant fashion.

  • The final appraisal report was understandable, sound 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. In addition, appraisers must abide by a meticulous industry code of ethics and observe 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).


    (Go to list of  questions) Regulations regarding licensing and certification vary from state to state. However, licensing and certification is commonly associated with many hours of coursework, tests and real world experience. Once licensed, he/she is required to take continuing education courses so the license remains current. To see the specific requirements for any state click here.

Who employs appraisers?   (Go to list of  questions)

Most of the time, appraisers are hired by lenders to render a value opinion on a home involved in a loan transaction - to make sure the house is indeed adequate collateral for the loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does McHugh Appraisal Service get the information used to estimate values in San Mateo County or other areas?   (Go to list of  questions)

Collecting information is one of the primary roles of an appraiser. Data can be classified as either Specific or General. Specific data is taken from the home itself; Location, condition, amenities, size and other specifics are noted by the appraiser while on site.

General data is gathered from a number of sources. To research recently sold homes to be used as "comps", we typically go to the local Multiple Listing Service. To verify actual sales prices, we look at tax records and other public documents that are usually online nowadays. Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood service.

And most importantly, the appraiser gathers general data from his or her past experience in creating appraisals for other houses in the same market.

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

An appraisal is a worthwhile anytime the value of your home is relevant to some financial decision. For those selling a home, you'll want to figure out the price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; 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 McHugh Appraisal Service is the best documentation to ensure assets are split up fairly. A house 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 stands for Private Mortgage Insurance. It covers the lender in case a borrower doesn't pay on the loan and the market price of the house is lower 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.

The savings from dropping the PMI required when you got your mortgage pays for the appraisal in no time. Nobody is more qualified than McHugh Appraisal Service when it comes to analyzing real estate appreciation in - and San Mateo County. Contact us today.

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

The first step in most appraisals is the home 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 status of its features. 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. Indoors, make sure the appraiser can easily access items like furnaces and water heaters.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
  • A plot plan or survey of the house and land (if available).
  • Written property agreements, such as a maintenance easement for a shared driveway.
  • Title policy that describes encroachments or easements.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, septic systems and your well.
  • Find copies of the current listing agreement, broker's data sheet and, in the event of a pending sale.

How does an appraiser define "Market Value"?   (Go to 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."

Who has rights to the appraisal report?   (Go to list of  questions)

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 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.

Which home renovations add the most to the price?   (Go to list of  questions)

Like all things real estate, this is dependent on a home's location. 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 are right up there with kitchens, returning 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.