Important Details 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 get their license from the state after they have qualified to be given the license. The property in consideration for appraisal is called the subject property.
The appraiser must not be tied to the people who are transacting the property in any way. They must be having no financial benefits from the property or any other kind of ties. To lenders, an appraisal guides the lender on how to lend money to the owner of a property. An appraisal is used as a collateral security to help in obtaining money from those who lend money to those who lend moneys. The lender on the other hand gives a loan equivalent to the value of the subject property stated in the appraisal.
The appraisal document contains detailed information about the subject property and details about the properties of its kind in the surroundings. It also contains an analysis of the prevailing real estate market. It gives more information on the neighborhood where this subject property is located. This includes stating the social amenities surrounding, whether the area is already grown or whether it is a developing area and other key details. The appraisal also includes the estimated time that the property would take to sell.
The two most popular methods used in property appraisal are sales comparison approach method and cost approach method. Sales comparison method involves coming up with the value of the subject property according to the prices at which other similar properties have sold at. These other similar properties are referred to as comparables. The cost approach method works well mostly to new properties.
The reason for this is that all costs involved in putting up the structure are known at the time when the property is newly constructed. 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.
Also, some problems may be identified with the subject property but this too can be well taken care of. Therefore the appraisal should not cause panic to the owner in any way whatsoever.