Real Property Appraisal: A primer

Unfortunately when life throws an unexpected turn like a divorce, you need to find a place that you can call home. Maybe you are looking for your own home or you want to find the perfect investment property, it takes a team to make it happen.

When working through a divorce settlement, most participants in the appraisal process know one another. While the most well known player in the process is the real estate agent, it is the role of the financial institution to fund the entire transaction. A final player is the title company, who is responsible for ensuring a clear title for purchase.

To be sure that the property value and the purchase price are equal, who is responsible? Enter the appraiser. Our job is to give you a fair-minded valuation of what a seller can expect to earn, with both buyer and seller receiving all of the pertinent information. A member of the Home Appraising Group, a professional Pennsylvania certified appraiser will work hard for you and keep you in the loop.

INSPECTING THE SUBJECT PROPERTY

The first thing we do at Home Appraising Group is to check the property in order to learn its current status. One of our experts will inspect the property to check for the homes location, existing amenities, the number of bedrooms and we make sure that the condition is up to par with what buyers expect. In order to accurately display the property’s size and layout, an appraiser will sometimes create a sketch of the floor plan. If we find anything that will impact the value of the home, positively or negatively, we make sure this information is highlighted.
After the site inspection, our team uses two – three approaches in order to calculate the true property value. These include: a paired sales analysis, a replacement cost calculation, and if it is a rental property – an income approach.

ANALYZING COMPARABLE SALES

Our appraisers know the area and the community very well. We make it a priority to take into consideration the value of individual elements that make your location desirable. Our appraisers spend time researching current real estate dealings in your community and generate a list of homes that are considered ‘comparable properties’. By applying calculations we also include value information of home items such as lot size, basement, hardwood floors, and other things that make the property unique. By adding and subtracting from the comparable sale price, we can closely match the elements of the property.

If a comparable listing has a bonus room that the house being appraised lacks, then the value of that room would be removed from the valuation of the comparable property. On the other hand, if the home being appraised has the bonus room, this value would be added to the value. We at the Home Appraising Group make it a priority to understand the specific value of properties in Pennsylvania.

COST
APPROACH

Using this method, the evaluator calculates the cost of regionally based construction costs, labor costs and other details that help outline what it would cost to build the property in the current market. This cost is often used as a top-end cost. This method is used in more rare situations.

VALUATION USING THE INCOME APPROACH

An additional method for house valuation is to look into the rental costs in the area. This information can lead to your homes value by comparing the revenue your home might generate compared with homes in the area.

ARRIVING AT VALUE CONCLUSION

Merging the information collected from all approaches allows the assessor to create a projected property value. The bottom line number on the report may not reflect the actual selling price of the property but does show a range of what the expected selling price may be. If a buyer has had their eye on your property or you have a high number of sought after amenities, this may drive the price of the home higher. The estimated value can serve as an indicator for the bank so they don’t loan more money than they would recoup should they need to resell the property in the future. As this process draws to a close, An expert from the Home appraising Group will pledge that you have the most secure valuation of your property to help you make a decision about your future.