Real Estate Appraisal to Find the Value of Your Property
Real estate appraisal is also known as property valuation, and the goal is to determine the market value of a house or another property.
Factors to Consider
There are different factors to take into account, including the location, neighborhood, transportation, proximity to schools and hospitals, and others. Homes that are found in locations close to parks, diners, and retail stores are appraised for higher values. Appraisers look at factors such as the number of bathrooms and bedrooms, size, and age. Home improvements, renovations, and extensions usually increase the value of a property (unless illegal). Homebuyers like newly furnished homes and modern bathrooms and kitchens. Some buyers prefer energy-efficient household appliances that reduce greenhouse gas emissions. Other features include new exterior and interior doors, aluminum siding, spacious balconies and garages, and more. Most buyers also like homes with spacious bathrooms and kitchens.
Other factors to consider include the overall condition of the property, the quality of the construction, air conditioning and heating, design, and whether it is a seller’s or buyer’s market. Appraisers look at the quality of the construction and the material used for the foundation, e.g. wood, concrete, brick, etc. Whether the home has been remodeled and the construction style are also important considerations. When it comes to age, it may be an advantage or disadvantage. A mansion in a historic district is a point in question.
Methods and Approaches
There are different methods to determine the value of a property – the income capitalization, sales comparison, and cost approach. In any case, appraisers look at the liquidation, investment, use, and market value of the property. The sales comparison approach focuses on comparable properties. Finance experts look at the actions of different parties, including investors, sellers, and homebuyers. There are diverse sources of data that help make a comparison, including real estate agencies, reports, publications, and others. There are other methods in use as well, including the profit, residual, investment, and so on. Appraisers who use these methods take different factors into account, including the fair and investment value and the market rent. There are also calculators that help homebuyers and sellers to determine the future value of a property. Plug in the appreciation rate, the year you want to make calculations for, and the current value of your home. For example, if the current home value is $200,000, and you want to calculate the value in 2017 at an appreciation rate of 6 percent, the projected home value will be $242,446. Online calculators also offer low and high projections at different appreciation rates.
Information Included in the Report
The report includes information such as the location and type of area, the estimated sales time, flaws and issues such as poor access, mould or mildew, termite infestations, and others. Side-by-side comparisons are also included. You will find details such as flood-zone information, access to utilities, zoning, shape, size, and more. The report also includes information such as the buyer’s and homeowner’s names, legal description, address, and any improvements made. Photos of the property should be enclosed along with the appraisal report. Other documents are also enclosed, including a sketch of the exterior, a street map, as well as an inspection report. The report can be based on the income, sales comparison, or cost approach.
The exterior-only inspection report is also included in the real estate appraisal and contains information such as city, neighborhood name, owner of public record, tax year, and assessor’s parcel. The report contains information such as date of the contract and contract price and whether it is a refinance or purchase transaction. There is a property description as well – whether it is commercial, multi-family, or residential property with 1 unit, 2 – 4 units, or larger. Amenities such as fencing, swimming pool, porch, deck, woodstove, fireplaces, and others are also listed. The general description also includes information about different structural elements such as gutters, windows, downspouts, roof surface, and exterior walls. The report contains information about the age and year built, the design, and the number of stories. Appraisers also list energy-efficient appliances and items and other features. There is a description of the car storage, including the driveway surface and number of cars. If the property is a planned unit development, the appraiser also lists the number of units sold, the total number of units, the units rented, and whether there are recreational or common facilities. The status of completion is also specified, i.e. whether the recreational facilities, common and structural elements, and residential units are complete. Other details to include are the market value, intended user and use, and the scope of work. The intended user is typically an individual customer or a financial institution, and the goal is to evaluate the property to be purchased.
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