Residential Appraisals
A residential appraisal is a defensible and carefully documented opinion of value. An appraiser provides a professional, unbiased opinion of market value, to be used in making real estate decisions. The appraiser must be an objective third party, someone who has no financial or other benefit to any person involved in the transaction. Homeowners need appraisals or appraisal reviews for a variety of reasons including a mortgage refinance, tax appeals, estates and litigation.
Appraisers present a formal analysis in the appraisal reports. The appraisal can include many things, depending on the property type, scope of work, use and user of the appraisal.
The two most common appraisal methods used for residential properties include the following:
Sales Comparison Approach
The appraiser estimates a subject property's market value by comparing it to similar properties that have sold in the area. The properties used are called comparables or comps. Some of the criteria used to identify properties that are similar to yours are location, building size, type of construction, number of bedrooms, finished basements, quality of the construction and number of garages.
No two properties are exactly alike so the appraiser must compare the comps to the subject property by making adjustments to the comps in order to make their features more in-line with the subject property. The result is a figure that shows what each comp would have sold for if it had the same components as the subject.
Cost Approach
The Cost Approach is most useful for new properties where the costs to build are known or can be supported using sources such as local building prices and National cost services. The appraiser estimates how much it would cost to build an exact replica, depreciate the cost for factors such as physical, functional and economic obsolescence and add this result to the value of the land. These are all factors that a Certified Residential Appraiser is trained to evaluate and compare accurately.
The results from the appraisal process can be transmitted by using a standardized form or in a narrative report with supporting documentation and additional detail information. The purpose of the report is to convey the estimated value of the subject property and support that estimate with corroborating information to the client.
Regulations regarding licensing and certification of Real Estate Appraisers are set by the State. Licensing and certification are associated with many hours of coursework, tests and practical experience. Once an appraiser is certified, they are required to take continuing education courses in order to keep the license current.
At Assessment Evaluation Inc. we are licensed Real Estate Appraisers. We are actively involved at every step of the appraisal process. From researching the appropriate market area to assembling the analysis of information pertinent to your property. We provide objective, impartial and unbiased opinions about the value of your property.