Factors to Consider in a Home Appraisal
Appraising in the real estate field is the act of valuing a real estate property by the estimate of a qualified person. This assists in predicting at how much a property would sell at the current market prices. This is mostly important for the owner of the property. An appraiser is the person who apprises the property. They are licensed by the state after they have achieved the required qualifications. The property being appraised is called the subject property.
The appraiser has to be a very objective third party. They should not be a person who will be benefiting financially as the result of the transaction that is going to occur. Appraisals are also used by lenders when lending money to the property owner. The appraisal is used as a security by borrowers to get money from banks and other financial organizations. Lenders are guided by the amount stated in the appraisal to know the amount that they will lend to the borrower.
In the appraisal, there are details about the subject property and also comparisons other similar properties currently in the market. It also contains an analysis of the prevailing real estate market. The appraisal also states the condition of the area where this property is located. These details are like stating the level of development of this region and also the kind of neighborhood around. It also contains an estimate sales time for the property.
The two most popular methods used in property appraisal are sales comparison approach method and cost approach method. In sales comparison, the appraiser is guided by comparing the costs at which other similar properties have sold at in the neighboring areas. The similar properties that the subject property is compared with are called the comparables. The cost approach is mostly used for new properties.
These is because the cost of constructing this property is known when the property is still new. Therefore the property is valued at the cost which the owner were to destroy the building and reconstruct it again.
Sometimes the appraisal might be low but the one should not worry since they are given certain procedures to follow in order to step up the appraisal.
If there are some problematic situations discovered during the time of appraisal, they can be easily fixed also. Therefore the appraisal should not cause panic to the owner in any way whatsoever.