![]() Comprehending AppraisalsTheir home's purchase can be the biggest transaction most of us will ever consider. Whether it's where you raise your family, a seasonal vacation property or a rental fixer upper, the purchase of real property is a complex financial transaction that requires multiple people working in concert to see it through. Most of the participants are quite familiar. The real estate agent is the most known person in the transaction. Next, the bank provides the financial capital required to fund the transaction. The title company sees to it that all aspects of the sale are completed and that the title is clear to pass to the buyer from the seller. So, what party makes sure the property is worth the purchase price? This is where the appraiser comes in. 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 licensed, certified, professional appraiser from Barnstable/Plymouth Appraisal Services will ensure, you as an interested party, are informed. Inspecting the subject propertyTo determine an accurate status of the property, it's our duty to first perform a thorough inspection. We must see aspects of the property first hand, such as the number of bedrooms and bathrooms, the location, and so on, to ensure they really exist and are in the condition a reasonable person would expect them to be. The inspection often includes a sketch of the floorplan, ensuring the square footage is correct and conveying the layout of the property. Most importantly, the appraiser identifies any obvious amenities - or defects - that would affect the value of the property. Back at the office, an appraiser uses two or three approaches to determining the value of the property: paired sales analysis and, in the case of a rental property, an income approach. ![]() Replacement CostHere, the appraiser gathers information on local construction costs, labor rates and other factors to calculate how much it would cost to build a property comparable to the one being appraised. This estimate often sets the maximum on what a property would sell for. It's also the least used predictor of value. ![]() Paired Sales AnalysisAppraisers are intimately familiar with the communities in which they work. They thoroughly understand the value of particular features to the homeowners of that area. Then, the appraiser researches recent sales in close proximity to the subject and finds properties which are 'comparable' to the property being appraised. Using knowledge of the value of certain items such as remodeled rooms, types of flooring, energy efficient items, patios and porches, or extra storage space, we add or subtract from each comparable's sales price so that they are more accurately in line with the features of subject property.
Once all necessary adjustments have been made, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for. When it comes to knowing the true worth of features of homes in Buzzards Bay and , Barnstable/Plymouth Appraisal Services is second to none. This approach to value is typically awarded the most importance when an appraisal is for a real estate purchase. Valuation Using the Income ApproachA third method of valuing a property is sometimes used when a neighborhood has a reasonable number of rental properties. In this situation, the amount of income the property produces is factored in with income produced by neighboring properties to derive the current value. ReconciliationExamining the data from all applicable approaches, the appraiser is then ready to state an estimated market value for the subject property. The estimate of value on the appraisal report is not always the final sales price even though it is likely the best indication of a property's valueThere are always mitigating factors such as seller motivation, urgency or 'bidding wars' that may adjust an offer or listing price up or down. Regardless, the appraised value is typically employed as a guideline for lenders who don't want to loan a buyer more money than they could get back in the event they had to sell the property again. Here's what it all boils down to, an appraiser from Barnstable/Plymouth Appraisal Services will help you attain the most accurate property value, so you can make profitable real estate decisions. |