Peter M. Cella & Associates has answers to "Frequently Asked Questions"

Peter M. Cella & Associates is prepared to reply to any questions you might have about appraisals or real estate in San Mateo County. Contact us today to talk about how we can help solve your valuation problems.

Define the term "Appraisal"
What does an appraiser do?
What would cause me to request services from Peter M. Cella & Associates?
What is the difference between an appraisal and a home inspection?
Is an appraisal the same as a comparative market analysis(CMA)?
What can I expect to see in my appraisal report?
Once the assignment has been completed, how can I have certainty that the value conclusion is valid?
How difficult is it to become certified?
Who engages the services of appraisers?
Where does an appraiser get the data 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?
How do I get ready for the appraiser?
What is "Market Value?"
Once complete, who actually owns the appraisal report?
Which home renovations add the most to the price?



Define the term "Appraisal"   (List of questions)

The appraisal process is an estimation that generates an opinion of value. This opinion or estimate is discerned through the use of a formal method that typically utilizes three "common approaches to value". The Cost Approach is one of the approaches that real estate appraisers use to find the value of a property; it involves concluding what the improvements would cost minus physical depreciation, adding the land value. Easily the most common approach in figuring the likely sales price of a home is the Sales Comparison Approach which concerns making a comparison to similar homes nearby. Being the most commonly used approach, the Sales Comparison Approach tends to be the most precise and best indicator of market value for a house. The third approach is the Income Approach, which is the most important method in appraising income producing properties - it deals with estimating what an investor would pay based on the income generated by the property.

What does an appraiser do?   (List of questions)

An appraiser produces a professional, unbiased assessment of market value, in the support of real estate exchanges. Appraisers show their professional conclusions in appraisal reports.


What would cause me to request services from Peter M. Cella & Associates?   (List of questions)

There are a lot of reasons to purchase an appraisal from Peter M. Cella & Associates with the most common reason being real estate and mortgage transactions. Other reasons for ordering an appraisal include:
  • To receive a loan.
  • If you would like to reduce your property tax burden.
  • To demonstrate a homeowner's acquired equity and remove PMI.
  • To contest improperly assessed property taxes.
  • If you need to settle an estate.
  • To offer you a leg-up when purchasing real estate.
  • To figure out the most probable property value when putting your home on the market.
  • To protect your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government 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.
Click here for a more extensive explanation of the process about getting an appraisal.


What is the difference between an appraisal and a home inspection?   (List of questions)

Home inspectors do not provide an opinion of value and are not appraisers. The purpose of a home inspection is to investigate the structure of the house from foundation to top. Commonly, a home inspection report will explain the amenities and the necessities of the home: air conditioning (weather permitting), electrical services, the condition of the heating system, the plumbing; then the structural integrity of the home such as the attic, exposed insulation, walls, floors, ceilings, windows, then the foundation, basement and visible structures.

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

Simply put, it's like comparing Shakespeare to reality TV. What the CMA relies upon are ill-defined trends. An appraisal is based on comparable sales that can be verified by records. Area and architectural prices are also precedent in an appraisal. All a CMA does is generate 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 most significant difference between a CMA and an appraisal. Real estate agents produce CMA's, and they don't always know the whole market or have specific competence when it comes to home valuation. The appraisal is produce by a licensed, certified professional who has made a career out of valuing properties. Further, the appraiser is an unbiased party, with no vested interest in the value of a home, unlike the agent, who gets a commission based upon the price of the home.

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

The main objective of an appraisal report 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 other intended users.
  • How the appraisal is supposed to be used.
  • The purpose of the assignment.
  • The type of value contained and a definition of that value.
  • The effective date of the value opinion.
  • Characteristics of the property that have a bearing on the value, including: location, physical attributes, legal attributes, economic attributes, the property rights valued, and non-real estate items included in the valuation, such as personal property, permanent equipment installations 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.
  • The scope of work used while working up the job.
For a more detailed look at the work that goes into an appraisal report click here: Sample Appraisal Report

Once the assignment has been completed, how can I have certainty that the value conclusion is valid?   (List of questions)

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

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

  • That appraisal services were delivered in a careful and conscientious manner.

  • That a solid, supportable appraisal report was communicated.
To become a state licensed appraiser, there are education requirements as well as on the jobexperience that must be attained - all with the end goal of gaining the skills required to render unbiased value opinions. In addition, appraisers must follow a strict industry code of ethics and observe national standards of practice for real estate appraisal. The tenets for working up an appraisal and documenting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


    (List of questions) Licensing and certification takes coursework, tests and real world experience. Once an appraiser is licensed, he/she must then take continuing education courses so the license stays up to date. To see the specific requirements for any state click here.

Who engages the services of appraisers?   (List of questions)

Mortgage lenders are an appraiser's most likely client, needing their services to ensure property 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 San Mateo County or other areas?   (List of questions)

Compiling information is one of the primary things an appraiser performs. 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 gathered by the appraiser while on site.

General data is collected from a numerous sources. Local Multiple Listing Services (MLS) have data on recently sold homes that might be used as comparables. To double-check actual sales prices, we use tax records 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 product.

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

What can a full appraisal do for me?   (List of questions)

If you're making some sort 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. When buying, be sure you're not overpaying by getting an independent appraisal. For parties settling an estate or divorce, an appraisal from Peter M. Cella & Associates is the best documentation to ensure assets are split up properly. 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?   (List of questions)

PMI is an acronym for Private Mortgage Insurance. This added policy takes care of the lender in case a borrower is unable to pay on the loan and the market price of the property 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.

Has your real estate appreciated since you first purchased? Contact Peter M. Cella & Associates today at (650) 678-6600 to see if you can save money by removing your Private Mortgage Insurance premium.

How do I get ready for the appraiser?   (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 condition of its features. 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 move any items that would get in our way while we measure the structure. Indoors, make sure the appraiser can get to appliances like furnaces and water heaters.

You can make our visit go faster and improve the quality of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if available).
  • List of personal property to be sold with the home.
  • 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.
  • A list of "proposed" improvements when the property is being appraised "as complete".

What is "Market Value?"   (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."

Once complete, who actually owns the appraisal report?   (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 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.

The exception to this rule is when a home owner engages 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 use the appraisal for any purpose.

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

It really depends on the market. For example, if you're in a neigborhood of small to medium priced homes, a media room may not be something people in that price range want

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 $30,000 kitchen remodeling project would add approximately $26,400 to the value of the home. Bathrooms are right up there with kitchens, returning 85%. On the contrary, work that may not add value would be painting just for the sake of redecorating.