Real Property Appraisal: A primer

Purchasing or refinancing a real estate owned or foreclosed home often require patience. Whether it is your forever home or an investment property, you want the process to be smooth. In order to get the valuable appraisal information you need, work with trusted experts who can guide you through the process.

Most parties involved have an existing working relationship. A real estate agent can help the buyer as they walk through the process. A bank is chosen to provide the financial support for the process. To ensure that all of the requirements have been fulfilled, the title company checks all of the boxes and makes sure the title is clear for transfer from seller to buyer.

Which person in the process makes sure that the property value and the sale price are in the same ballpark? This is when the appraiser enters the project. We give both buyer and seller a fair-minded appraisal of the real estate parcel in the transaction with both parties staying well informed throughout. A skilled Pennsylvania licensed appraiser from our group will keep you informed throughout the process.

INSPECTING THE SUBJECT PROPERTY

The primary duty of experts at the Home Appraising Group is to evaluate the property and discover the properties status. In order to come up with a fair assessment of the property we must see the home first hand to check the location, amenities and number of bedrooms and bathrooms for accuracy. Sketches are one way that some appraisers take accurate notations on a properties size, layout and floor plan. If an assessor encounters any defects or problems that could impact property value, this is noted as a high priority.

Upon completion of the site inspection it is our turn to make sense of that data and find a valuation. Generally, we implement two or three approaches to best determine the actual property value. The three most commonly used are the paired sales analysis, the replacement cost calculation, and the income approach (for rental based properties).

ANALYZING COMPARABLE SALES

Appraisers have a depth of knowledge about the area in which they work. They know that certain characteristics of a home are attractive to people in the area. First, the appraiser generates a list of recent sales in your neighborhood and finds homes that are a close match to yours on paper. Next they apply information about your homes amenities (things like fireplaces, hardwood floors, remodels, etc. that add value), and add or subtract from the sale prices of the comparable home sales to accurately depict the price of your property.

  • Let’s assume a comparable property has a 3-car garage that is not present in the subject property. If this were the case the appraiser could deduct the value of the garage from the sales price of the comparable.
  • However, if the subject property possesses this extra garage space and the comp does not, the value can be added to the price of the comp.

The experts at the Home Appraising Group understand how important it is to know the value that certain property characteristics have throughout Pennsylvania. This valuation approach is very commonly used when an appraisal is being conducted as part of the home purchase process.

COST
APPROACH

During the cost method professional studies the costs of building in your community and adds that to current local labor costs. By adding these two pieces of information with other pertinent costs they can calculate how much it would cost to rebuild the same property. This sets a maximum standard for selling the property. This is among the least commonly used methods.

VALUATION USING THE INCOME APPROACH

One more way to find the value of a home is to have an expert look into the current rental prices of houses in your area. In order to determine a value an expert appraiser can compare the rental revenue of the property with comparable rentals revenue.

ARRIVING AT VALUE CONCLUSION

After all of the information is in, your appraiser will create a report that outlines the estimated valuation of the property. While the number at the end of the report represents a culmination of the collected data, it is not a finite sale price. Factors like the desirability of your home and the state of the market can add to or detract from the final selling price. The value of the appraisal is valuable information for the lender so they know what would be a fair loan. At the end of this process, your appraisal expert at Home Appraising Group certifies that you property value is fair and unbiased so you can make an informed real estate decision.