I Apppraise

Introduction to Commercial Real Estate Appraisal

I-Appraise — Sat, 26 Mar 2011 21:21:32 +0000

The valuation process is a systematic approach that a real estate appraiser uses in order to provide a client answers to questions they have regarding the value of real property. A wide variety of value related questions can be solved when this process is modified correctly and applied by an appraiser.

The first step in the valuation process is that an agreement is made between the client and the appraiser. The appraiser agrees to provide a valuation service in return for a fee. An opinion of the market value of a particular property is the primary objective of most appraisal projects. In general, once an appraiser delivers the results of the appraisal to the client, the service agreement is completed. The valuation process includes all of the necessary steps to accomplish these valuation tasks.

As in the scientific method, the valuation process follows a specific set of procedures. The number of steps is dependent on a variety of variables. The model supplies a pattern for the application of valuation methodologies. This allows the appraiser to combine market research and data analysis through appraisal techniques to form an opinion of value that is well supported. Models are also the standard by which appraisers judge the value conclusions of one another.

Once an appraiser has been assigned a property, research must be completed in order to obtain a suitable understanding of the market in which the property resides. Trends are observed all the way from an international perspective down to the local or regional level. This market analysis allows the appraiser to have a grasp on the dynamic relationships between the forces, factors and participants involved in the real property value. Quantitative data about market trends is also extracted during the research phase.

The overall goal of any appraisal project is to obtain a defendable value assumption that reflects the important factors involved in the market value. The property must also be valued with its intended use in mind.

To come to a value conclusion, three primary methodologies are used in combination. The three are:

1. The Cost Approach Method – derived from the present cost of reproducing the existing structure including entrepreneurial incentive or profit, deducting the loss from depreciation from the total cost, plus the estimated land value.

2. The Sales Approach Method – derived from comparing the property to recent sales of comparable properties in the same market.

3. The Income Capitalization Method – derived by converting its anticipated earning power into property value.

Each of these three methods is interconnected. In order to complete the process, the appraiser will draw from data gathered from each methodology and develop a real property value. This value can either be a single value estimate, or a value range.

Article Source: http://EzineArticles.com/5352754

Commercial Appraiser Methods: The Sales Comparison Approach

I-Appraise — Wed, 16 Feb 2011 15:25:51 +0000

The sales comparison approach is a method in which the appraiser concludes a value based on the analysis of sales, listings or imminent sales that are comparable to the subject property.

One of the primary arguments for the sales comparison approach is that equivalent or even competitive properties in a market offer quality insight into the real market value of a given property. An appraiser must be skilled in comparative analysis in order to properly understand the similarities and differences between properties that effect value.

The sales comparison approach is formulated on the principles of supply and demand, substitution, balance and external forces.

Supply and demand is an indicator of value through representative market activities of both buyers and sellers. An appraiser must explore the market in order to determine shifts in favor of either the supply side or the demand side. This can substantially affect the value of a property.

Demand can be approximated by factors such as number of potential uses for a property, and the buying power of the possible users. Supply can be approximated by looking into the number of properties planned or already constructed, as well as the number of current properties on the market that are either unsold or vacant.

Substitution is a principle by which the value of a property can be determined by the price that it would take to obtain a similar property within a practical amount of time. If a viable substitute property is not available in a given market, then the reliability of the sales comparison approach is weakened.

The principle of balance, in regard to the sales comparison approach, indicates that markets tend toward equilibrium of supply and demand. The balance principle also takes into account the correlation between a property’s improvements to land in regard to its environment. If a property is either over improved or under improved considering its location then it is considered out of balance. This imbalance can cause similar properties within a market to be appraised at different values.

Finally, external forces affect all property values. The appraiser must account for all significant external forces. For instance, a market that is under a period of substantial economic growth would be valued much differently than one that is declining. Also included in these external forces could be things such as convenience, attractive or unattractive surroundings, and criminal activity.

This is one reason that a local appraiser with proper understanding of his market can provide a highly informative and accurate valuation.

Article Source: http://EzineArticles.com/5352824

Commercial Appraisal Fees Explained

I-Appraise — Tue, 18 Jan 2011 13:28:29 +0000

Many are dumbfounded by the process commercial appraisers go through to complete an appraisal of their property. They often don’t understand why the appraisal fee is "so high" and why we are quoting anywhere from three to six weeks to complete their appraisal. It is my sincere hope that this article will shed some light on the appraisal process.

To begin with, it is important to understand the laws governing the appraiser and the appraisal process. Many will remember the real estate bust of the early 1990s which was in large part precipitated by the mass takeover by the Resolution Trust Corporation of Savings and Loans. The governmental imposed reforms that followed included the passage of the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) which called for state licensing all appraisers for assignments which include FDIC Insurance.

The passage of FIRREA brought in a much needed rigorous set of appraisal standards, called the Uniform Standards of Professional Appraisal Practice (USPAP), to which state appraiser licensing bodies bind licensed appraisers. These standards to a large degree drive the appraisal process, and while dry, an understanding of those requirements would be enlightening to those who order commercial and residential appraisals on a regular basis.

When you order a commercial appraisal, you are essentially paying for the appraiser’s time and expertise. A typical commercial appraisal will take me anywhere from 30 to 60 hours. Moreover, a seven unit apartment building, reported in a summary narrative format, will likely take only a little less time as than a 14-unit building. Likewise, a 12,000 square foot industrial building will likely take about the same amount of time to complete as a 24,000 square foot industrial building. So it becomes readily apparent that sale price and property value have little to do with the commercial appraisal fee.

So what does affect commercial appraisal fees? There are essentially four factors affecting the fee of the commercial appraisal: 1) complexity of the assignment, 2) availability of data, 3) report format and 4) required turn-around time.

1) Complexity of the assignment – I could write for hours about this, but suffice it to say that the more complex the assignment, the larger the scope of the investigation, the longer it will take and the higher the fee will be.

We recently completed the appraisal of a 23,000 square foot industrial building in Los Angeles. It was an owner-occupied building located in an area of similar properties. The highest and best use was simple, in that it’s continued use as-improved was not in doubt and there were sufficient recent transactions, both sale and rental, so as to make the data gathering process a breeze. All of these points were factored into the fee when we issued the appraisal fee quote. The project took about 35 man hours and the appraisal fee reflected this.

Conversely, last year we appraised a ski resort. The income approach drove the appraisal process, and suffice it to say that it took many more man-hours than the industrial building described above. Simply put, the scope of the assignment was far greater, hence the time into the assignment and the resulting appraisal fee were higher accordingly.

Further, the size of the property has little to do with how complex the appraisal process will be, or become. Some of the most difficult commercial properties to appraise can be small mixed-use properties, such as a retail building with a house behind it, or office over retail. This is because there few similar property transactions, thus cash-flows and sales data sets need to be blended.

Take as another example the one acre redevelopment site that we recently appraised in Highland Park, California. The property was improved with a mix of five commercial buildings and a fourplex apartment building. In the highest and Best Use Analysis, it was determined that the value as-improved was outweighed by the value of the underlying site. Simply put, similarly located and zoned parcels of that size were selling for more than the overall value of the properties as-improved. To come to that conclusion, however, required the appraisal of each of the properties individually, followed by the appraisal of the land underlying the properties. To make things more difficult, land sales of that size in that market were very hard to come by and required significant analysis.

2) Availability of data – As the reader can see from the above examples, the scope of the assignment and data availability are intertwined. Another recent assignment was the appraisal of a portfolio of retail hardware stores with attached lumber yards. All had low-cost steel buildings on large sites located in very small market areas. Moreover, each was located many miles apart, thus there was no data crossover between the assignments. For each of these appraisals, we scoured the markets for transactions of similar buildings on similarly sized parcels. We visited and revisited the markets to inspect comparables, but found no sales that were relevant to the analyses at hand. It was clearly apparent that the value of the properties was primarily in the land, but what contributory value did the improvements have? In the end, the primary approach to value was the cost approach, whereby we appraised the land and added to that the depreciated value of the improvements based on cost, but taking into account external forces affecting demand for such improvements. This assignment turned out to be complex due to the lack of availability of similar comparable data.

3) Report Format is Purpose Driven – There are essentially three formats available to the appraiser, the full-narrative, the summary narrative and the restricted report (in order of cost – highest to lowest). Samples of each can be reviewed on our Sample Appraisals page of this site. More often than not the user of appraisal services has little control over the required report format.

The typical lender must require a summary format, or higher due to FDIC insurance, but will usually order a summary format. If the appraisal assignment is complex, however, it becomes more likely that a lender will require a full narrative analysis, which can cost thousands of dollars more than the same commercial appraisal reported in a summary format. It is important to note that USPAP defines the level of detail that is contained in each of these formats, but that no matter the reporting format, the scope of the appraisal is to be the same.

The most economical of formats, the restricted report, is what some refer to as a letter appraisal. However, these reports can be relied upon only by the client (again, USPAP), thus, if there is potential that a third party will need to rely on the value conclusions, this format is not allowable. A great example would be the appraisal of a property for estate taxes. Because the client needs the value to determine tax owed, the IRS is passively relying on the analysis, thus the restricted format is not allowable for that purpose.

However, we are often called upon to complete a commercial appraisal for purposes where the restricted format is allowable. Such a purpose would be to determine the listing price or acquisition price of a property, to make a sell/hold decision, or simply to determine one’s net worth.

4) Required Turn-Around – This is where the user of appraisals has the most influence on fee. We often receive calls asking for a summary appraisal of a property that is escrow with a closing date of say two weeks away. As stated earlier, the typical appraisal will take anywhere from 30 to 60 man hours, and in most cases the appraiser does not know the full scope of analysis required in the commercial appraisal until he actually sees the property. On short-order appraisals this presents a huge risk factor for the appraiser in that the fee quote is typically issued prior to seeing the subject and what data is available. As a result, the appraiser will usually factor such risk into the fee quote with considerations such as potentially having to work weekends to complete the assignment on-time. Again, per USPAP, there are no shortcuts – the analysis has to be completed to USPAP standards regardless of fee and turnaround time.

To sum it all up, the best advice I can give anybody in need of a commercial appraisal, is to give the appraiser as much latitude as possible. If you have it in your power to utilize a restricted report, your fee will be lower than if you require a summary or a full narrative appraisal. If you have a recent appraisal of the subject, or confirmable comparable data that is useful, let the appraiser know. Most importantly, if you can order your appraisal with a due date of four to eight weeks out, you will no doubt get a better fee quote than if you wait until two weeks before you need it.

Article Source: http://EzineArticles.com/1919748

Factors Considered in Home Appraisal – The Most Important Ones

I-Appraise — Sun, 12 Dec 2010 16:42:13 +0000

Appraisal is simply an estimation of value. A licensed appraiser will evaluate the property and give his or her opinion about the property condition performs it. Although, it may be similar to inspection but there is a big difference. The main goal of this activity is to give a justified opinion about the property value. They need this because it can help in various decision-makings. For example, the seller can use this as a basis for pricing. The buyer can use this to know how much to offer. Lenders need this to know how much money to credit to their borrowers. It has also uses for other purpose like taxation and many others.

However, one must fully understand home appraisal. This can help you determine the factors that will be taken into consideration in determining the appraised value. These factors could either increase or decrease it.

So of you want to know the important ones, check out below:

1. The type of house- it could be identified as one story, two-story, split-level, factory-built.
2. Features of the home (including design)- The materials used and the kind of structure present and how they were built.
3. Improvements made in the property- new components of the house are identified and described.
4. Comparables- Just like in the CMA, several comparables will be listed and will also be described using the same factors.
5. Sale with involvement of financing
6. Location- The kind of neighborhood is identified. Any zoning areas are will be considered as well as its proximity to other establishments.
7. Age of Property
8. Size
9. Depreciation

The value of the property can be identified using 2 approaches. It could be through sales and cost approach. In sales comparison approach, the appraiser draws the value of the property simply by identifying comparables within the area. He or she would compare the features of a home including lot size.

As for cost approach, the appraiser draws the value of the property by looking into the value of the land, the depreciation, the overall value of the property and the cost of replacing them upon destruction.

After the appraiser has performed the appraisal, he or she would have to create a report stating the following things:

- The method used for determining the value.
- A description of the property including its size, condition and other features.
- Any problems related to its structure.
- A description of the location.
- The comparables used
- The intended use of appraisal
- Certification
- Limiting conditions.

When you seek appraisal services, make sure you hire a good appraiser. He or she must be certified or licensed. Hiring someone with these credentials would mean they are able to perform their job according to the standards set by the accredited appraiser organization in the country (USPAP). But this is not all that defines competency in the field of appraising. Your appraiser must have enough experience. He or she should have appraised various properties within the area.

Find more real estate tips in Paradise Valley Condos for Sale and Paradise Valley Golf Properties.

So of you want to know the important ones, check out below:

After the appraiser has performed the appraisal, he or she would have to create a report stating the following things:

- The method used for determining the value.
– A description of the property including its size, condition and other features.
– Any problems related to its structure.
– A description of the location.
– The comparables used
– The intended use of appraisal
– Certification
– Limiting conditions.

Find more real estate tips in Paradise Valley Condos for Sale and Paradise Valley Golf Properties.

Advantages of Instant Home Appraisal

I-Appraise — Sat, 06 Nov 2010 18:33:01 +0000

Before selling a house or buying a house one should know the approximate value of the house. To understand the value of the house one can look in the instant home appraisal websites which can save one a lot of money and energy.

The two best option one can choose when estimating the value of the house is to either go to an experienced realtor who does know about the area and property one lives or go to the free websites where one has to provide the basic answers to the questions asked like the street address, area, bathrooms and bedrooms. After the information provided an estimate value of the property will be calculated.

Buying and selling of the house

When selling a house the listing price should be lower than the appraisal price as this will attract lots of buyers and there will be multiple offers if the house is in a good condition and this might drive up the actual price estimated.

But when buying a house one should not base the price of the property on the listing price but should be based on the value of the property on the other hand if the listing price is lower than the value of the home then it is a good deal to have.

Methods of estimated house appraisal

To buy or sell the existing house one should always get information on the estimate value of the property and then decision made as this will get one a good deal of the property. There are different methods of home appraisal estimate which is useful when making a good deal of the house. We can also get free estimate of the house online without any hassle.

If one is planning to buy a home then one will have to get a professional appraisal in order to get a loan for the house. A professional house appraisal will come to the house to conduct a survey of the house where he will be taking a few hours in taking measurements and pictures of the house to compare it with the sales of the home in the area. The service provided can cost a person to about two hundred to four hundred dollars.

Another method to get an estimate of the house for free is to go to an experienced agent who knows about the area and is able to give an accurate detail of the estimate. One should take advice from at least three agents to get a fair picture of the estimate.

Another method is going online and providing basic information and the estimate is for free and accurate based on the public sales records.

If you are interested to discover more astonishing facts on instant home appraisal, you must not be late in visiting http://www.opuslettings.co.uk.

My House Appraisal is Low – I Cannot Refinance My Mortgage!

I-Appraise — Sun, 24 Oct 2010 11:26:50 +0000

Every mortgage news story is filled with details of banks going under and the tightening of home loan credit lines. Homeowners looking to refinance are often finding it more difficult than it was a few years ago. First, they now have to meet a set of stringent new requirements; then they risk a low house appraisal.

Unfortunately, this problem of low house appraisals is occurring across the country. Homeowners who purchased several years ago are often being told that their homes have fallen in value and that the appraisals on them are insufficient for the lender to make a new loan. This is happening even in cases where you may already have a loan with the mortgage lender you are trying to refinance with.

Since there are few sources of mortgage news that really explain to a homeowner what an appraiser does when he determines a value for your home, I have prepared this "nutshell" version. I have also explained one of the major reasons why appraised values are currently much lower than only a few years ago. The actual reasons for a low appraisal may be much more complex, but this is usually the primary culprit.

When the appraiser looks at your house, it is his job to estimate the probable selling price on the date that he views the property. The main factor that determines the probable selling price of your house is the real estate market in the area where the house is located. If the area has many repossessed homes that are actively "for sale," it may drive down the probable selling price of your home.

How? It is a matter of simple economics. The appraiser looks at what your house would need to be priced at to compete with all of the homes that are "for sale" in your neighborhood. There are only so many buyers who are willing to buy in any individual neighborhood, and when two homes offer the same features, buyers will usually go with the lower priced choice. This is the same principle that shoppers use when comparing two boxes of crackers at the grocery store. If both brands taste nearly identical, but one brand offers 50 more crackers or is 50 cents cheaper, shoppers will usually choose the better price or value.

The problem for house appraisals comes in because, often, banks sell their repossessed homes at below market value in order to liquidate those assets faster and raise capital to make new, hopefully more stable, loans. So, if your neighborhood has a lot of repossessed homes being sold, they may pull down the market value of your own home when the appraisal is done for the mortgage refinance company. This happens because in order to compete with these lower priced homes, private homeowners are forced to reduce the prices they ask for their own homes. This in turn creates a pool of low priced privately owned homes that your house would have to compete with in order to sell.

While it is important for the appraiser to know what you paid for the house, the current appraisal must be based on the sales prices of homes that have sold in the last 90 days to 6 months. So, if you bought your home 3 years ago, the price you paid then may have very little do with the price you could get out of it now.

Likewise, it is okay to tell the appraiser what you think your home might be worth, but don’t expect him to necessarily agree with you. The question the appraiser is trying to answer for the mortgage refinance company is not what you think your home is worth, or what you think you would like to sell it for, or even how much you have invested. The question is "What would this home need to be priced at in order to sell in a reasonable time, all things being equal?"

By Billy Oatey. Billy grew up in Northern Lower Michigan and has enjoyed hiking and fishing in many places within the State. In his travels around Michigan, he often carries mugs of coffee or bottled water and has seen first hand how disposable plastic bottles are ruining the wild parts of our world. He now sells stainless steel water bottles and travel mugs at his blog http://stainlesssteeltravelmug.org.

The average person can find it difficult to do anything for the ecology, but using recyclable and reusable bottles and cups is something everyone can do easily.

Should I Have My Home Appraised Before Selling It?

I-Appraise — Tue, 21 Sep 2010 15:22:31 +0000

This is a common question for people who are looking to sell their current home. There are a few positives and negatives associated with the appraisal of your home, but generally speaking, the advantages of getting your place appraised will far outweigh any potential negatives. We will list some of them here.

When you get your home appraised, you are getting as close to the market value of the property as possible. Don’t let your buyers tell you how much your property is worth. If you do, you might end up losing out on tens of thousands of dollars. Compare those two prices. The cost of home appraisal is in the $300 to $400 range. Would you pay that much money in order to potentially save yourself a few thousand dollars?
Getting your home appraised can help to remove some of the uncertainty that goes with selling a home. When you hire a real estate agent, part of what you are paying for is the legitimate image that makes people believe you are not trying to scam them. The same goes for getting your home appraised. Now that you know the official price, you can tell your potential buyers and it will make the buying process much more comfortable for them.
When you know the market value of your home, you get the peace of mind of having much less uncertainty with regard to the price you are offering. Nobody wants to spend their lives worrying about every little detail and whether one is being accurate or not. You can cut out at least one unknown in your life by getting your home appraised. It might be small, but the small things can add up to much bigger problems.

Seen this way, it is always a good idea to get your home appraised before selling it. You don’t have the time or desire to worry about the value of your home. It is much better if you hire a specialist who is trained in determining the market value of your home for you. They will be much more efficient and will do a better job than the ordinary person who does not spend all of his or her time studying the market value of homes.

Hiring a professional home appraiser is no different from hiring a doctor to check out any health problems you may face. Doctors go through ten years of school to know what they know. They can solve problems that you either don’t understand or don’t have the time or money to try to understand. They have tools available to them that make them extremely efficient at diagnosing and treating your health issues. You wouldn’t try to take your health into your own hands because you will make mistakes and you won’t be nearly as efficient. The same goes for estimating the value of your home. Leave that to the experts so you can save a bundle of time and money.

Peiman is a Realtor in the Toronto Area. You can find all the information you will need to purchase or sell a home at http://www.peimanb.com

What To Expect From Your House Appraisal

I-Appraise — Sat, 28 Aug 2010 06:16:35 +0000

Having your house appraised can be a scary step in the moving process, especially if you don’t know what to expect. Will your house pass muster or will they find some hidden defects and problems lurking in the basement and attic? Should you scrub the house clean?

Don’t worry – this isn’t a test of how clean you keep your house or even if your house has problems (that will be for the home inspector to find out). The appraiser is there to determine a fair market value for your home. Whether you are selling the house or refinancing, this is a common part of the process and the inspector is quite used to traipsing about peoples homes in all kinds of disarray so you need not be embarrassed if your house is messy and it will not affect the value the appraiser puts on the property.

Determining the market value of your home is necessary so that your lender knows the home is valued at or above the amount of money you are borrowing. An appraisal is an estimate of worth. It is an opinion but is not entirely a subjective process. The FNMA, Federal National Mortgage Association sets up the guidelines and assigns values to certain assets of your home to ensure a fair sale.

The value of your home will be determined by comparing it to similar area properties that have sold in the past few months. The appraiser looks for properties that have the same number of bedrooms, baths, square footage and amenities like a fireplace or garage in your neighborhood or town. They start by looking at your neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and home values. A valid appraisal can be done when 3 or more properties similar to your own have been found.

Once the appraiser has these homes, there will be some adjustments made to take into consideration features that your home has the others don’t or features they have that you don’t. These features have nothing to do with your décor – they are based solely on house size, rooms and amenities so your hot pink kitchen will not affect the value of your home appraisal!

The process is quite methodical and done to standard practices so you need not worry. If you are moving and you have hired a realtor, you will find the appraisal will come in right on the button for what they have valued your home at. Most realtors know the market quite well so you needn’t worry that your buyer won’t be able to secure funding because of your home appraisal.

Lee Dobbins writes for http://www.moving-and-more.com where you can learn more about moving and selling your house.

Buying a Home? Questions You Should Ask About the Appraisal Process!

I-Appraise — Sat, 10 Jul 2010 20:39:00 +0000

When you’re getting a Houston TX Mortgage you will find that you will also need an appraisal. Pretty much any loan program whether you’re purchasing or refinancing requires it. Since this is the normal course of doing business many people don’t ask about this requirement, but they SHOULD!

Over a year ago Fannie Mae and Freddie Mac required lenders to order the appraisal through an independent process that is separate from any interested party. What this means for most lenders is they end up going through a Third Party Vendor who hires an appraiser based on a certain set of requirements. This all sounds good in theory but in practice it’s been bad for the consumer.

Where these requirements fall short is with the Third Party Vendor. They typically hire appraiser for less than half of the actual appraisal fee and expect the appraiser to give 100% of their time and energy on the appraisal. Most of the seasoned and highly experienced appraisers can’t afford to take on the same work for half the pay so the Third Party Vendors usually hire new and inexperienced appraisers for the job. Sometimes the appraisers are hired for a job in an area they have no knowledge of. These issues typically culminate into poor appraisals and values that are not consistent or correct for the home being appraised.

When the appraisal is challenged for value or any other issues the lender must navigate a large bureaucratic system with lots of red tape that can cause a buyer to lose the home of their dreams.

So what should a person getting a Houston Mortgage ask about the appraisal process? First, does the lender you’re thinking of using order their appraisal through a Third Party Vendor or do they order it through an internal group that is independent as required by the Home Valuation Code of Conduct (aka HVCC)? If the lender uses a Third Party Vendor, ask if your full appraisal cost is being given to the appraiser and if it isn’t, how much is given to the appraiser? Remember, you usually get what you pay for! Since most lenders use a Third Party Vendor you will not know where the appraiser is coming from to do the appraisal on the home your wanting to purchase and you will not have the opportunity to know the experience of the appraiser.

If the lender is providing you with a Houston Mortgage uses an internal group that is HVCC compliant you should ask about their appraisers’ knowledge of the area and experience. The lender should have no problem with providing you this information and the credentials of each of the appraisers. Just understand the lender doing your Houston TX Mortgage will not have the ability to pick the actual appraiser who will be appraising your future home.

As a Houston TX Mortgage Lender, we order our appraisals through an internal group that is independent as required by HVCC. Our appraisers are geographically assigned based on their typical service area and receive 100% of the appraisal fee you pay. All of our appraisers have worked with us for years and we are comfortable with any of them completing your appraisal.

If your shopping around and don’t hear an answer that resembles ours, you should keep shopping! Appraisal fees are typically over $400.00 and when you add up other fees you typically have during the purchase process such as inspections, earnest money, credit report, etc… you could be sourly disappointed right before you were SUPPOSED to close. Not to mention… lighter in the wallet.

Brad Notter is part of the Brad and Denise Team at http://houstontxmortgagelender.com/ providing Free Expert analysis of you’re home loan finance needs. We have many Free Online Workshops to help you Sell or Buy YOUR next Home. You can attend one of our many workshops at http://houstontxmortgagelender.com/free-online-workshops/

Factors That May Determine the Final Appraisal of Your Home

I-Appraise — Thu, 11 Feb 2010 13:46:46 +0000

So, after careful consideration of the time, expense, and energy involved in selling your own home, you have decided to go the For Sale By Owner route. You have taken care of all necessary inspections and legalities, you are ready to plant a sign on your front lawn and place an ad in the paper. Before you take these steps to attract potential buyers, of course, you will need to know the value of your home. This will help you to finalize the proper sale price, one that accurately reflects the condition of the property and surrounding neighborhood, one that will attract buyers to make bids.

To help determine the sale price, a property appraisal agent is needed for assistance. One thing to note when your home is appraised: the resulting suggested sale price is derived from several points of interest. You might think the price of a home is determined by its age and livable condition (to be certain, those are important factors), but oftentimes an appraiser looks at more than the house. Sometimes he will look beyond the actual building.

Here are just a few factors taken into consideration when a house is appraised. Consider all of the criteria before you delve into selling.

The Overall Market – Is it a "buyer’s market" or a "seller’s market" right now? During a "buyer’s market" period, people looking for homes have the advantage. There will be many homes available, and prices will be competitive. A "seller’s market" is more advantageous, naturally, for the seller. With fewer homes on the market, a seller has more leverage to negotiate a higher price to many buyers bidding for the property.

Location – The old adage of real estate always rings true. Location, location, location! Is your home in a desirable, low-crime neighborhood? Is development booming? Are you near good schools and hospitals? Are you near the ocean, the mountains, the Interstate, or within walking distance to a busy downtown? When you look out the windows, what do you see: the beach, the desert, busy roads, or the city dump? The appraiser takes all of these into consideration to determine a fair price.

Design – With some houses, you can automatically tell when they were built. Like fashion and fads, construction styles change over time. Once upon a time split-level homes were all the rage, while in recent years you may notice subdivisions comprised of attached single-family homes. In certain neighborhoods, you will also detect a pattern, with a particular style repeated every three or so houses. An appraiser will look at the way your house looks when making a price determination. Is it a style of home that will appeal to today’s buyer? Is the color scheme attractive? Do you use vinyl siding? Will a buyer look at your house and say, "It’s perfect!"

Quality of Construction – What is the foundation of your home: brick, concrete, or wood? Are there leaks? Is the roof sturdy? Has anything been added to the building, or remodeled? When an appraiser looks at your home, he will note the sturdiness and potential of the home to determine if one should pay more for it.

Age and Overall Condition – When it comes to certain houses, age may be an advantage. In an historic district, for example, an owner of a hundred-year-old townhome may be able to attract buyers interested in vintage real estate. More so if the house has been cared for very well all this time. Regardless of the age of your home, a property inspector will note wear and tear and overall condition when making a final price.

Rooms – How many rooms does your house have? How many bedrooms, bathrooms? What space is designated for living and recreation? Is there an all-purpose room? These days, people with family tend to drift toward larger houses with such space, while a couple in retirement may want something smaller. What you have to offer a potential buyer will determine for how much the house should sell.

Square Footage – How big is the house? One-story or two? Of the square footage, how much is usable, living space as opposed to space taken up in construction? These days certain people crave more space and may be willing to pay more for it. An appraiser can help determine if your house is worth that price?

Storage – Does your home have an attic, basement, or both? If yes, are they completed and do they provide livable space? Are they divided into rooms? How big is your closet space? The type of storage and amount you offer can be a factor in a high appraisal of your property.

Heating and Air – Does your home have central air or must you rely on window units to keep cool? Is your home heated by electric, gas, or oil? How your home is heated and cooled can be a factor in determining the price of your home. Will a buyer want to pay more for a home knowing he has to install AC and change out gas heat he doesn’t want? These are things to consider.

Parking – Is there a garage? One-car, two-car, attached or detached? Is there a carport? If you live in an urban area, does your home or condo come with its own parking space? This type of convenience (or inconvenience) is looked at often when appraising home values.
Amenities – Do you have a pool? A Jacuzzi? Skylights and ceiling fans that convey? If you’re on the water, do you have deep-water access and a boat slip? Is your home equipped with an elevator for elderly residents, or a high-tech security system? The more luxuries are attached to a home, the more value can be given.

Financial Considerations – Have any other homes in your neighborhood sold recently? For how much? Are you in current financial straits, that you need to sell quickly? Various financial factors can play a role in a final value, so be sure to go over these items with the property appraiser.

From the inside out, no door is left unopened when your home is appraised for sale value. Before you sell, take the time to know what is to be considered before you arrive at a final sale price to offer potential buyers.

Kathryn Lively is a freelance writer specializing in articles on Virginia Beach real estate and Outer Banks travel.