What Is A Real estate Appraisal


A home purchase is the largest most expensive single investment that most people will ever make. Most of the people engaged in this transaction are already quite familiar. The Realtor is the most common face involved in these transactions. Then comes the mortgage company that deals with the financial capital necessary to fund the transaction. The title company ensures that all aspects of the transaction are completed and a clear title should pass through from the seller to the buyer.

But one important thing is who makes sure that the value of the property is in line with the amount being paid. There are too many people exposed in the real estate process that sometimes the dollar value of the property is not equal to the amount being paid.

This is where Real estate Appraisal comes in. A real estate appraisal is a service performed by an appraiser. It is an unbiased opinion of value based upon the highest and best use of the real property. To be an informed party, most people turn to a licensed, certified and professional real estate appraiser to provide them with the most accurate real estate appraisal of the true value of their property.

So what does really goes into a real estate appraisal? Everything starts with the inspection. A real estate appraisal should have an inspections review paper on its files to ascertain the true status of the property. The Appraiser must actually see the features to be written down on the real estate appraisal. He must inspect for the numbers of bathrooms, bedrooms, the location, and so on, to ensure that they are in good condition. The real estate appraisal usually includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, the real estate appraisal person will be looking for an obvious features or defects that would affect the value of the house.

Once the inspections is done, the real estate appraisal person would actually use two views to determine the real value of the property; which is the cost approach, the sales comparison.

THE COST APROACH

This view is the most easiest to understand, the real estate appraisal person uses information on local building costs. Labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This answers the question, why would you buy another property when it would cost less to just build a new one. While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach.

THE SALES

Instead the real estate appraisal people rely on the sales comparison approach to value these types of items. The real estate appraisal person gets to know the neighborhood in which they work. The real estate appraisal should have a study on the traffic patterns, school zones and other busy throughways; and they use this information to determine which attributes of a property will make a difference in the value. Then the real estate appraisal person researches recent sales in the vicinity and finds property which are comparable to the subject being appraised. The real estate appraisal person as a basis to begin the sales comparison approach uses the sales prices of these properties.

Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the subject property. It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. The bottom line is: a real estate appraisal person will help you get the most accurate property value, so you can make the most informed real eestate decisions.