Understanding AppraisalsGetting real estate is the most important financial decision some could ever make. Whether it's a primary residence, a seasonal vacation home or an investment, the purchase of real property is a detailed transaction that requires multiple parties to pull it all off. The majority of the participants are quite familiar. The most recognizable person in the exchange is the real estate agent. Then, the bank provides the financial capital required to fund the exchange. And ensuring all requirements of the exchange are completed and that the title is clear to pass from the seller to the buyer is the title company. So, who's responsible for making sure the value of the property is in line with the purchase price? This is where you meet the appraiser. We provide an unbiased estimate of what a buyer might expect to pay — or a seller receive — for a property, where both buyer and seller are informed parties. A licensed, certified, professional appraiser from Goins Appraisal Service will ensure, you as an interested party, are informed. Inspecting the subject propertyOur first duty at Goins Appraisal Service is to inspect the property to ascertain its true status. We must physically see features, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they indeed are present and are in the shape a typical buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the square footage is proper and conveying the layout of the property. Most importantly, the appraiser looks for any obvious amenities - or defects - that would have an impact on the value of the house. After the inspection, we use 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 CostThis is where the appraiser gathers information on local building costs, the cost of labor and other factors to derive how much it would cost to replace the property being appraised. This figure usually sets the upper limit on what a property would sell for. The cost approach is also the least used method. Sales ComparisonAppraisers become very familiar with the neighborhoods in which they appraise. They thoroughly understand the value of certain features to the residents of that area. Then, the appraiser looks up recent sales in close proximity to the subject and finds properties which are 'comparable' to the real estate 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 adjust the comparable properties so that they are more accurately in line with the features of subject.
After all differences have been accounted for, 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 putting a value on features of homes in Sacramento and Sacramento, Goins Appraisal Service is second to none. This approach to value is most often given the most importance when an appraisal is for a home exchange. Valuation Using the Income ApproachA third way of valuing real estate is sometimes applied when an area has a reasonable number of renter occupied properties. In this scenario, the amount of income the property produces is factored in with income produced by comparable properties to derive the current value. ReconciliationAnalyzing the data from all approaches, the appraiser is then ready to document an estimated market value for the subject property. It is important to note that while this amount is probably the most reliable indication of what a house is worth, it may not be the price at which the property closes. Prices can always be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'. But 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 case they had to put the property on the market again. Here's what it all boils down to, an appraiser from Goins Appraisal Service will guarantee you attain the most accurate property value, so you can make wise real estate decisions. |