The appraisal is simply an estimate of the value. A licensed appraiser will evaluate the property and provide an opinion on the condition of the property that carries it out. Although, it may be similar to inspection, but there is a big difference. The main objective of this activity is to give a justified opinion on the value of the property. They need this because it can help in various decision making. For example, the seller can use this as a basis for pricing. The buyer can use this to find out how much to offer. Lenders need this to know how much money to credit their borrowers. It also has uses for other purposes such as taxes and many others.
However, one must fully understand home appraisal. This can help you determine the factors that will be taken into consideration in determining the appraised value. These factors could increase or decrease it.
If you want to know the important ones, see below:
1. The type of house: could be identified as one-story, two-story, two-story, factory built.
2. Characteristics of the house (including design): the materials used and the type of structure present and how they were built.
3. Improvements made to the property: the new components of the house are identified and described.
4. Comparables: As in the CMA, several comparables will be listed and also described using the same factors.
5. Sale with financing participation
6. Location: the type of neighborhood is identified. Any zoning area will be considered as well as its proximity to other establishments.
7. Age of the property
Property value can be identified by 2 approaches. It could be through the sales and cost approach. In the sales comparison approach, the appraiser calculates the property’s value simply by identifying comparables within the area. He or she would compare the features of a home, including the size of the lot.
Regarding the cost approach, the appraiser extracts the value of the property by examining the value of the land, the depreciation, the total value of the property and the cost of replacing them after destruction.
After the appraiser has performed the appraisal, you would have to create a report stating the following:
– The method used to determine the value.
– A description of the property including its size, condition and other characteristics.
– Any problem related to its structure.
– A description of the location.
– Comparable used
– The intended use of the appraisal
– Limiting conditions.
When looking for appraisal services, be sure to hire a good appraiser. He or she must be certified or licensed. Hiring someone with these credentials would mean that they can perform their job according to the standards set by the nation’s accredited appraisal organization (USPAP). But this is not all that defines competition in the field of valuation. Your appraiser must have enough experience. He or she should have appraised various properties within the area.