Residential Real Estate Appraisal
Home buying and selling requires home inspections and appraisals as a first time homeowner you will need to have a residential real estate appraisal as well as a pest and structural inspection, in your real estate transactions you will face many appraisal methods that will report on the estimate of the property's market value to determine the sales price.
The National Association of Independent Fee Appraisers is an association of professional real estate appraisers and they provide updates, general questions and continued education.
Most lenders will require an appraisal in order to secure a loan against the real estate property mostly to insure that the home market value can sell for the amount of the loan. some have used comparative market analysis to determine what the asking price should be. Since the appraisers valuation report is detailed it is the first choice for banks when deciding to lend money
The difference between an appraisal and a home inspection
To determine if a home is in good condition you will need to get a home inspector to check the roof, chimney or other structural issues. On the other hand a real estate appraisal does a property valuation or land valuation, which requires developing an opinion of the value of real property by using its Market Value.
Real estate appraisal is generally performed by a licensed or certified appraiser, and there are three general methods used for determining value. They include: the cost approach, the sales comparison approach and the income approach.
Some of the most common types of definitions used for determining value in a real estate appraisal include Market Value, Value-in-use, Investment value, Insurable value and Liquidation value.
California Home Appraisal
Residential Appraisal Report
The property being appraised is called the subject property also when you apply for the loan you will pay for the appraisal. Most reports are very detailed, some of the things you can expect to see are
First there is details about the subject property, along with comparisons of at least three similar properties. Then there is an evaluation of the current real estate market in your surrounding area. Appraisers will make note if they see any issues that may hurt the property's value, also there are notations about characteristics that may be of concern such as a unstable cracked foundation.
You will see estimates of the average sales date for the property as well as the type of area the home is located as far as development, stand alone acreage and resale of single family or multifamily dwellings.
You will see estimates of the average sales date for the property as well as the type of area the home is located as far as development, stand alone acreage and resale of single family or multifamily dwellings.
Appraisal Methods for Residential Properties
Some common appraisal methods used for residential properties include: The sales comparison approach is where the appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area.
How it works is that the properties used are called comparables, or comps. As you are probably aware the result is a figure that shows what each comp would have sold for if it had the same components as the subject.
Studies show that the cost approach is most useful for new properties, where the costs to build are known simply because many home buyers are choosing to have the appraiser estimate how much it would cost to replace the structure if it were demolished.
Studies show that the cost approach is most useful for new properties, where the costs to build are known simply because many home buyers are choosing to have the appraiser estimate how much it would cost to replace the structure if it were demolished.