Clyde Laut & Associates, Inc. has answers to "Frequently Asked Questions"

Clyde Laut & Associates, Inc. is always more than happy to address any questions you might have about appraisals in Pueblo County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
What would cause me to need services from Clyde Laut & Associates, Inc.?
Is an appraisal the same as a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What are the contents of an appraisal report?
Upon completion of the appraisal, what assurance is there that the final number is trustworthy?
How difficult is it to become certified?
Who are an appraiser's customers?
Where does an appraiser get the data used to estimate values in Pueblo 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"?
Who has rights to the appraisal report?
Which home renovations add the most to the price?



Describe an appraisal   (Return to top)

An appraisal is an inspection allowing the appraiser to come to an opinion of value. The real estate appraiser must use a several "approaches," typically three, to come to the estimation of market value. One of the processes is the Cost Approach - which is how much capital would be required to replace the improvements, minus physical deterioration and other factors, then adding the land value. Another of the methods is the Sales Comparison Approach - which involves finding a comparable analysis to other similar properties within a close proximity which have recently sold. Being the most popular approach, the Sales Comparison Approach tends to be the most accurate and best indicator of market value for a residence. 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 capital a property would bring in.

Describe what an appraiser does   (Return to top)

An appraiser provides an impartial and well supported opinion of market value, often in the context of a real estate sale. Appraisers exhibit their professional investigation in appraisal reports.


What would cause me to need services from Clyde Laut & Associates, Inc.?   (Return to top)

There are a lot of reasons to purchase an appraisal from Clyde Laut & Associates, Inc. with the usual reason being real estate and mortgage transactions. A few other reasons for purchasing an appraisal report include:
  • If you are applying for a loan.
  • If you would like to reduce your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove insurance.
  • To fight high property taxes.
  • To deal with an estate.
  • To give you an edge when purchasing real estate.
  • To determine the most probable price when selling real estate.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because an official agency such as the IRS requires it.
  • It's possible you could have to deal with being in a lawsuit - an appraisal will definitely help.
For a more extensive explanation of the appraisal process click here.


Is an appraisal the same as a home inspection?   (Return to top)

The appraiser is not a home inspector nor does he/she do a complete home inspection. The purpose of a home inspection is to investigate the structure of the home from bottom to attic. The usual property inspector's report will contain an evaluation of the integrity of the home'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.

Is an appraisal the same as a comparative market analysis(CMA)?   (Return to top)

To be blunt, it's like comparing Shakespeare to reality TV. What the CMA relies upon are vague trends. The appraisal relies on similar verifiable comparable sales. Location and construction costs are also precedent in an appraisal. The CMA will provide a non-specific figure. Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person creating the report is frankly the biggest difference between a CMA and an appraisal. 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. A certified, Colorado licensed professional who made a career on valuing homes in and around Pueblo County creates the appraisal. Moreover, the appraiser is an independent voice, with no conditional interest in the property's value, unlike the agent, who gets a commission based upon the price of the home.

What are the contents of an appraisal report?   (Return to top)

Every appraisal should reflect a credible value opinion and should document the following:
  • Who engaged the appraiser and whose purposes the appraisal is to serve.
  • How the appraisal is supposed to be used.
  • The reason for the appraisal.
  • The type of value reported and a definition of that value.
  • The effective date of the appraiser's opinions and conclusions.
  • Characteristics of the property that have a bearing on the value, including: location, physical characteristics, legal attributes, economic factors, the real property interest valued, and non-real estate items included in the appraisal, 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 the like.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • The scope of work considered when completing the job.
For a more in depth 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 trustworthy?   (Return to top)

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

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

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

  • That a trustworthy, supportable appraisal report was imparted.
There are intense education and on the job experience requirements that must be adhered to in order to become a licensed appraiser in Colorado. In addition, appraisers must stick to a strict industry code of ethics and respect national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Licensing and certification requires coursework, tests and experience working under a supervisor. Once an appraiser is licensed, he or she is required to take continuing education courses so that the license doesn't expire. To see the specific requirements for any state click here.

Who are an appraiser's customers?   (Return to top)

Mortgage lenders are an appraiser's typical customer, using their services to ensure property involved in a mortgage transaction is adequate collateral for a loan. Attorneys and CPAs also hire appraisers for asset division and estate settlements.

Where does an appraiser get the data used to estimate values in Pueblo County or other areas?   (Return to top)

One of the most important things an appraiser does is to collect data. Data can be divided into 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 collected from a many places. To look up recent sales to be used as "comps", we often use the local Multiple Listing Service. Tax records and other public documents reveal actual sales prices in a market. Appraisers often 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 service.

And last but not least, the appraiser gathers general data from his or her past experience in creating appraisals for other properties in the same market.


Why do I need a professional appraisal?   (Return to top)

If you're making any kind of financial decision and the value of your home is relevant, you'll want a full appraisal. For those selling a home, you'll want to determine 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. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. 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?   (Return to top)

PMI is an acronym for Private Mortgage Insurance. This supplemental policy covers the lender if a borrower doesn't pay on the loan and the value of the house is lower 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.

Has your real estate appreciated since you first purchased? Call Clyde Laut & Associates, Inc. today at (719) 595-0211. You may be able to get rid of your Private Mortgage Insurance premium.

Should I do anything in advance of the appraisal inspection   (Return to top)

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 status of its features. Inside, make sure it is clutter free and that we can get to things like furnaces and water heaters. On the outside, trim any landscaping so we can be free to get an accurate measurement of exterior walls.

To help expedite our work as well as ensure a more accurate report, try if possible to have the following items:
  • A plot plan or survey of the house and land (if available).
  • 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.
  • Any inspection reports, or other recent reports for termites, EIFS (synthetic stucco) wall systems, your septic system and wells.
  • Find copies of the current listing agreement, broker's data sheet and, if the sale is "pending", the purchase agreement.

How does an appraiser define "Market Value"?   (Return to top)

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?   (Return to top)

For mortgage transactions, the lender requests the appraisal, either directly or through a third party. Even though it's the buyer that eventually pays for the report, the lender is the intended user. The buyer is 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 scenarios, the appraiser may stipulate 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 do whatever they want with the appraisal.


Which home renovations add the most to the price?   (Return to top)

A home's location - what city it is in and even what part of that city - is key to this popular question. 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.

As a rule, the most value returned from renovating a home comes in the kitchen. 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, yielding 85%. On the contrary, something that may not increase your value would be painting just for the sake of redecorating.