One's home purchase
is
the most significant
transaction
some of us
could
ever
consider.
Whether it's
where you raise your family,
a seasonal vacation home or
one of many rentals, purchasing real property is
an involved financial transaction that requires multiple parties to make it all happen.
To learn more about appraising, click here to see a short video or call us today to talk about your specific property.
Most of the participants are very familiar.
The most recognizable face in the exchange is the real estate agent.
Then, the mortgage company provides the financial capital necessary to fund the transaction.
The title company ensures that all areas of the transaction are completed and that the title is clear to transfer to the buyer from the seller.
So who makes sure the real estate is consistent with the amount being paid?
This is where you meet the appraiser. We provide an unbiased opinion of what a buyer could expect to pay - or a seller receive - for a parcel of real estate, where both buyer and seller are informed parties. A professional South Carolina licensed appraiser from A. M. Appraisals will ensure you as an interested party are informed.
The inspection is where an appraisal begins
To determine an accurate status of the property, it's our duty to first perform a thorough inspection.
We must see features hands on, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they indeed are present and are in the condition a typical buyer would expect them to be.
To make sure the stated size of the property is accurate and convey the layout of the home, the inspection often requires creating a sketch of the floor plan.
Most importantly, the appraiser identifies any obvious amenities - or defects - that would affect the value of the property.
Once the site has been inspected, we use two or three approaches when determining the value of real property:
a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.
Cost Approach
Here, we pull information on local building costs, labor rates and other elements to ascertain how much it would cost to build a property similar to the one being appraised. This figure often sets the upper limit on what a property would sell for. The cost approach is also the least used predictor of value.
Analyzing Comparable Sales
Appraisers become very familiar with the neighborhoods in which they work.
We innately understand the value of specific features to the homeowners of that area.
Then, the appraiser looks up recent sales in close proximity to the subject and finds properties which are 'comparable' to the home at hand. Using knowledge of the value of certain items such as
remodeled rooms, types of flooring, energy efficient items, patios and porches, or additional storage space, we add or subtract from each comparable's sales price so that they more accurately portray the features of subject property.
Say, for example, the comparable has an extra half bath that the subject does not, the appraiser may deduct the value of that half bath from the sales price of the comparable.
However, if the subject has an extra half-bathroom and the comparable does not, the appraiser might add a certain amount to the comparable property.
In the end, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for.
This approach to value is commonly awarded the most consideration when an appraisal is for a real estate exchange.
Valuation Using the Income Approach
In the case of income producing properties - rental houses for example - the appraiser may use a third approach to value.
In this case, the amount of revenue the real estate generates is taken into consideration along with income produced by comparable properties to derive the current value.
Reconciliation
Combining information from all applicable approaches, the appraiser is then ready to state an estimated market value for the property at hand.
The estimate of value at the bottom of the appraisal report is not necessarily the final sales price even though it is likely the best indication of a property's market value
There are always mitigating factors such as seller motivation, urgency or 'bidding wars' that may adjust the final price up or down.
But the appraised value is often employed as a guideline for lenders who don't want to loan a buyer more money than they could recover in case they had to put the property on the market again.
It all comes down to this: An appraiser from A. M. Appraisals will guarantee you get the most fair and balanced property value, so you can make wise real estate decisions.
