Unbiased Estimates of Residential Properties

A home purchase is the largest single investment most people will ever make. Whether it’s a primary residence, a second/vacation home, or an investment, the purchase of real property is a complex financial transaction that requires multiple parties to pull it all off. That’s where Anthony Appraisers Inc comes in.

Most of the people involved are very familiar. The Realtor is the most common face of the transaction. The mortgage company provides the financial capital necessary to fund the transaction. The title company ensures that all aspects of the transaction are completed and that a clear title passes from the seller to the buyer.

So who makes sure the value of the property is in line with the amount being paid? There are too many people exposed in the real estate process to let such a transaction proceed without ensuring that the value of the property is commensurate with the amount being paid.

This is where the appraisal by Anthony Appraisers Inc comes in. An appraisal is an unbiased estimate of what a buyer might expect to pay – or a seller receive – for a parcel of real estate where both buyer and seller are informed parties. To be an informed party, most people turn to a licensed, certified, professional appraiser to provide them with the most accurate estimate of the true value of their property.

Call today for a free appraisal consultation.

The Inspection

So what goes into a real estate appraisal? It all starts with the inspection. An appraiser’s duty is to inspect the property being appraised to ascertain the true status of that property. The appraiser must actually see features, such as the number of bedrooms and bathrooms, the location, etc., to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. All rooms will be photographed

The inspection often includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, the appraiser looks for any obvious features – or defects – that would affect the value of the house.

Once the site has been inspected, an appraiser uses two or three approaches to determine the value of real property: a cost approach, a sales comparison approach, and, in the case of a rental property, an income approach.

Cost Approach

Although on older homes, the cost approach is of little value, it is the easiest to understand. The appraisers use information on local building costs, labor rates, and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for.

Why would you pay more for an existing property if you could spend less and build a brand-new home instead? While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach.

Sales Comparison Approach

Appraisers most heavily rely on the sales comparison approach to value. Appraisers get to know the neighborhoods in which they work. They understand the value of certain features to the residents of that area. They know the traffic patterns, the school zones, the busy throughways – and they use this information to determine which attributes of a property will make a difference in the value. 

Then the appraiser researches recent sales in the vicinity and finds properties which are ”comparable” to the subject being appraised. The sales prices of these properties are used as a basis to begin the sales comparison approach.

Income Approach

This approach is rarely used on residential properties. Typically due to lack of available data. Using knowledge of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces, or view lots (just to name a few), the appraiser adjusts the comparable properties to more accurately portray the subject property.

For example, if the comparable property has a fireplace and the subject does not, the appraiser may deduct the value of a fireplace from the sales price of the comparable home. If the subject property has an extra half-bathroom and the comparable does not, the appraiser might add a certain amount to the comparable property.

In the case of income-producing properties – rental houses, for example – the appraiser may use a third approach to valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.

Reconciliation

Combining information from all approaches, the appraiser is then ready to stipulate an estimated market value for the subject property. In most instances, most consideration is given to the sales comparison approach. It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. There are always mitigating factors, such as seller motivation, urgency, or “bidding wars” that may adjust the final price up or down.

The appraised value is often a guideline for lenders who don’t want to loan a buyer more money than the property is actually worth. Bottom line - an appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions.

Why Hire Anthony Appraisers Inc?