Facts about Residential Appraisals
Real estate appraising is an exercise that involves establishing the market value of a real property. It aids in knowing the worth of a real property according to what the market prices are. 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 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. These details are like stating the level of development of this region and also the kind of neighborhood around. The appraisal states also the time the property would stay in the market when it comes to the time of selling it.
There are two major approaches of carrying out appraisal which include sales comparison and cost approach. 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. The similar properties that the subject property is compared with are called the 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.
If the result of the process is a low appraisal, the owner needs not to worry since the appraising team will guide the owner on steps to take in order to improve the appraisal.
If there are some problematic situations discovered during the time of appraisal, they can be easily fixed also. Hence, one should never shy away from carrying out an appraisal for their residential property because there is nothing that lowers the appraisal that cannot be improved.