An Overview of the Appraisal ProcessPurchasing a house is the largest financial decision many people could ever encounter. It doesn't matter if it's a main residence, a second vacation property or an investment, purchasing real property is a detailed transaction that requires multiple parties to make it all happen.
Most of the parties participating are quite familiar. The most known face in the exchange is the real estate agent. Then, the mortgage company provides the financial capital required to bankroll the exchange. The title company sees to it that all areas of the transaction are completed and that a clear title passes from the seller to the purchaser.
So who's responsible for making sure the property is consistent with the purchase price? In comes the appraiser. We provide an unbiased opinion of what a buyer might expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional Ohio licensed appraiser from Absolute Value Appraisers will ensure you as an interested party are informed.
Inspecting the subject propertyTo ascertain an accurate status of the property, it's our responsibility to first complete a thorough inspection. We must actually see features, such as the number of bedrooms and bathrooms, the location, and so on, to ensure they really are there and are in the shape a typical person would expect them to be. To make sure the stated size of the property is accurate and convey the layout of the property, the inspection often includes creating a sketch of the floor plan. Most importantly, we look for any obvious features - or defects - that would have an impact on the value of the house.
Following the inspection, we use two or three approaches when determining the value of real property: paired sales analysis and, in the case of a rental property, an income approach.
Replacement CostHere, the appraiser analyzes information on local construction costs, the cost of labor and other factors to derive how much it would cost to build a property similar to the one being appraised. This estimate commonly sets the maximum on what a property would sell for. The cost approach is also the least used method.
Sales ComparisonAppraisers get to know the subdivisions in which they appraise. We innately understand the value of particular features to the homeowners of that area. Then, the appraiser researches recent transactions in close proximity to the subject and finds properties which are 'comparable' to the real estate at hand. Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we adjust the comparable properties so that they more accurately match the features of subject.
Valuation Using the Income ApproachA third way of valuing a house is sometimes used when an area has a measurable number of rental properties. In this case, the amount of income the property yields is taken into consideration along with other rents in the area for comparable properties to determine the current value.
Arriving at a Value ConclusionAnalyzing the data from all applicable approaches, the appraiser is then ready to put down an estimated market value for the property at hand. The estimate of value at the bottom of the appraisal report is not always the final sales price even though it is likely the best indication of a property's market value There are always mitigating factors such as seller motivation, urgency or 'bidding wars' that may adjust an offer or listing price up or down. But the appraised value is typically used as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace. Here's what it all boils down to: An appraiser from Absolute Value Appraisers will help you get the most fair and balanced property value, so you can make wise real estate decisions.