When it comes time to have a real estate appraisal most people don’t know exactly what that entails or how a home in evaluated. The method by which real estate appraisers come by the value depends on the property and the reason for the appraisal. These two factors can dramatically alter the real estate appraisal.
Not all properties are examined the same way by appraisers. When examining a home, the appraiser looks at the features and liabilities of the home, factors them into location and land, and then adds up this total. To get the correct value, they look at similar features in local houses that were sold in the last six months. This gives a clear idea as to the current market value.
However, if you need a commercial real estate appraisal or to appraise a property that operates a business, then this is worth much more than the land and features. It also provides income. In that case, the appraiser adds the total of the potential income and the property value to create an appraisal.
An Insurance Appraisal
Sometimes a home appraised only for insurance purposes. This means that a real estate appraisal will find the replacement value of the property, or how much it would cost to duplicate the house identically. They look at each feature, list it, and then find out how much it would cost to have that feature installed again. Once they create this number, then they have to depreciate it for cost. For example, a garage door that cost two thousand dollars to replace but was twenty years old might only appraise for five hundred or a thousand dollars.
Generally, insurance appraisals are higher than market value appraisals, since insurance companies tend to value items on the high end. It also varies by the insurance company and the mortgage company.
Categorised in: Appraisal Tutorials & Info
This post was written by Joseph Castaneda