Real Property Appraisal : A primer
A home purchase is the most serious investment most people could ever make. It doesn’t matter if it’s where you raise your family, a second vacation property or one of many rentals, purchasing real property is a detailed transaction that requires multiple parties to make it all happen.
The majority of the parties involved are very familiar. The most known face in the transaction is the real estate agent. Next, the bank provides the financial capital needed to bankroll the transaction. Ensuring all aspects of the transaction are completed and that the title is clear to pass from the seller to the buyer is the title company.
So what party…In comes the real estate appraiser. </span. We provide an unbiased estimate of what a buyer could expect to pay – or a seller receive – for a parcel of real estate, where both buyer and seller are informed parties. A professional real estate appraiser from The Appraising Group will ensure you as an interested party are informed.
INSPECTING THE SUBJECT PROPERTY
If applicable we will visit the subject property. Most appraisals are full interior and exterior inspections. We are photographing, measuring, taking notes, and otherwise becoming familiar with the subject property. Desktop appraisals may involve collecting data we can find from other sources as well as questions posed to you about the property. A driveby appraisal is an exterior assessment only without entering and also involves obtaining data elsewhere about the subject.
ANALYZING COMPARABLE SALES
Real estate appraisers get to know the communities in which they work. We thoroughly understand the value of particular features to the people of that area. The home appraiser researches recent transactions in the neighborhood for Sales Comparison Approach and finds properties that are ‘comparable’ to the property in question. Using knowledge of the value of certain items such as square footage, additional bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we add or subtract from each comparable’s sales price so that they are more accurately in line with the features of subject property.
If, for example, the comparable has an extra half bath that the subject doesn’t, the home appraiser may deduct the value of that half bath from the sales price of the comparable.
But, in the case where the subject has something such as an extra half bath that a comparable doesn’t have, the real estate appraiser might add the value of that bath to the comparable property.
The comparable properties are then weighed usually according to the most similar to the subject and a value conclusion is derived. This approach The Sales Comparison Approach to value is commonly awarded the most consideration in most residential assignments.
COST APPROACH
With The Cost Approach, the appraiser analyzes information on local building costs, the cost of labor and other factors to ascertain how much it would cost to build a property similar to the one being appraised. Then less depreciation, land and site improvements added. Typically this method is more reliable with newer construction. It is not as common to always be a reliable approach to value.
VALUATION USING THE INCOME APPROACH
A third method of valuing a house is sometimes used when an area has a reasonable number of rental properties. In this situation, the amount of revenue the property yields is factored in with income produced by neighboring properties to determine the current value.
ARRIVING AT VALUE CONCLUSION
Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the property in question. The estimate of value at the bottom of the appraisal report is not necessarily the final sales price even though it is likely the best indication of what a property could sell for in an open market. Depending on the specific situations of the buyer or seller, their level of urgency or a buyer’s desire for that exact property, the closing price of a home can always be driven up or down. But the appraised value is often used as a guideline for lenders who don’t want to loan a buyer more money than they could recover in the event they had to sell the property again. At the end of the day: An appraiser from The Appraising Group will guarantee you get the most fair and balanced property value, so you can make wise real estate decisions.
