G.E.Nichols Appraisal Services has answers to "Frequently Asked Questions"

G.E.Nichols Appraisal Services is prepared to reply to any concerns you might have about appraisals or real estate in Taos County. Contact G.E.Nichols Appraisal Services today to talk about how we can help solve your specific valuation problems.

Describe an appraisal
Describe what an appraiser does
What would cause me to require your services?
How is an appraisal different than a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
After completing the report, what guarantee is there that the value conclusion is legitimate?
What are the requirements to be a certified appraiser?
Who hires G.E.Nichols Appraisal Services
Where does an appraiser get the data used to estimate values in Taos County or other areas?
Why do I need a professional appraisal?
What exactly is PMI and how can I get rid of it?
Do you need anything from the homeowner in advance?
How does an appraiser define "Market Value"?
Who has rights to the appraisal report?
I want to get more for my house. Where should I spend money renovating?



Describe an appraisal   (Go to list of  questions)

The appraisal process is an estimation that leads to an opinion of value. This opinion or estimate is discerned through a formal method that usually utilizes the three main "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 property, minus depreciation and physical dilapidation, plus the land value. Another of the methods is the Sales Comparison Approach - which deals with discovering a comparison to other similar properties within a close proximity which have recently sold. Usually, the Sales Comparison Approach is the most definite indicator of market value of a home. 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 income produced by the property.

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

An appraiser offers a fair and credible assessment of market value, often in the context of a real estate sale. Appraisers summarize their investigation in appraisal reports.


What would cause me to require your services?   (Go to list of  questions)

There are many reasons to get an appraisal with the usual reason being real estate and mortgage transactions. Some other reasons for ordering an appraisal include:
  • To get a loan.
  • If you would like to reduce your property tax obligations.
  • To show a homeowner has 30% equity and remove PMI.
  • To contest high property taxes.
  • To deal with an estate.
  • To provide you a negotiating tool when purchasing a home.
  • To figure out a likely sales price when listing your home.
  • 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 detailed explanation of the process involved in 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 does not do a comprehensive home inspection. A third-party home inspector will judge the structure of the house, from the top to the bottom. The standard property inspector's report will contain an evaluation of the condition of the property'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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Go to list of  questions)

To be blunt, it's like comparing opera to country. The CMA depends on vague local market trends. Appraisals use comparable sales which are verifiable resources. Also, the appraisal checks other factors like condition, location and replacement costs. The CMA will provide a non-specific figure. Delivering a defensible and careful analysis, an appraisal will give a clear opinion of value.

The credentials of 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 true grasp of valuation methods or the entire market, create CMA's. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Moreover, the appraiser is an independent party, with no vested interest in the property's value, unlike the agent, whose income is tied to the price of the home.

What can I expect to see in my 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:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • The intended use of the report.
  • The appraisal's purpose.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the appraisal.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic attributes, the property rights in question, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.
  • 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 considered when completing the job.
For a more comprehensive look at all that goes into an appraisal report click here: Sample Appraisal Report

After completing the report, 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:
  • The appraisal contained an apropos analysis of the information.

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

  • That appraisal services were not rendered in a careless or negligent manner.

  • The final appraisal report was clear, legitimate and conclusive.
To become a state licensed appraiser, we must fulfill intense education and experience requirements that give us the background to produce an unbiased opinion. In addition, appraisers must obey a stringent industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for working up 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 are different from state to state. In general, licensing and certification is most often associated with many hours of classroom study, tests and practical experience. Once an appraiser is licensed, he or she is required to complete continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who hires G.E.Nichols Appraisal Services   (Go to list of  questions)

Mortgage lenders are an appraiser's typical customer, using their services to ensure real estate involved in a mortgage transaction is enough to cover a loan balance in the case of default. Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

Where does an appraiser get the data used to estimate values in Taos County or other areas?   (Go to list of  questions)

Compiling information is one of the primary roles of an appraiser. Data can be split into Specific or General. Specific data is collected 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 numerous places. To research recently sold homes to be used as "comps", we often use the local Multiple Listing Service. To double-check actual sales prices, we research items in the assessor's office and other public documents that are usually online nowadays. Appraisers routinely have to report when a property lies in a flood zone, so that information is retrieved from a FEMA data outlet 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 creating appraisals for other houses in the same market.

Why do I need a professional appraisal?   (Go to list of  questions)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. For those selling a home, you'll want to figure out a 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a house 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?   (Go to list of  questions)

PMI is an acronym for Private Mortgage Insurance. PMI protects the lender in case a borrower is unable to pay on the loan and the market price of the home 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.

The savings from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in no time. Nobody is more qualified than G.E.Nichols Appraisal Services when it comes to analyzing real estate appreciation in El Prado and Taos County. Contact us today.

Do you need anything from the homeowner in advance?   (Go to list of  questions)

We start with an inspection of the property. 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 we have easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and relocate any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can easily access items like furnaces and water heaters.

You can make our visit 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.
  • Written property agreements, such as a maintenance agreement for a shared driveway.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Energy efficiency upgrades or roof repairs) and permit confirmation (if available).
  • Information on "Homeowners Associations" or condominium covenants and fees.

How does an appraiser define "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."

Who has rights to 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 certainly 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.

The exception to this rule is when a home owner hires an appraiser directly. In these scenarios, the appraiser may state 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.

I want to get more for my house. Where should I spend money renovating?   (Go to list of  questions)

Like all things real estate, this is dependent on a home's location. For example, if you live in a cold region, insulated windows can be a real plus. But they aren't as attractive in a warm-weather climate.

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 were second, yielding 85%. Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.