![]() Decoding the Appraisal ProcessTheir home's purchase can be the most serious financial decision many will ever encounter. It doesn't matter if a primary residence, a seasonal vacation property or one of many rentals, the purchase of real property is an involved financial transaction that requires multiple people working in concert to make it all happen. The majority of the participants are quite familiar. The real estate agent is the most known person in the exchange. Then, the bank provides the money necessary to fund the deal. And ensuring all aspects of the transaction are completed and that a clear title passes from the seller to the buyer is the title company. So, who makes sure the value of the property is in line with 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 Northern Living Appraisals will ensure, you as an interested party, are informed. Inspecting the subject propertyOur first task at Northern Living Appraisals is to inspect the property to ascertain its true status. 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 are present and are in the condition a typical person would expect them to be. The inspection often includes a sketch of the floorplan, ensuring the square footage is proper and conveying the layout of the property. Most importantly, the appraiser identifies any obvious amenities - or defects - that would have an impact on the value of the house. Next, after the inspection, an appraiser uses two or three approaches to determining the value of real property: paired sales analysis and, in the case of a rental property, an income approach. ![]() Cost ApproachHere, the appraiser uses information on local building costs, labor rates and other factors to figure out how much it would cost to replace the property being appraised. This estimate often sets the maximum on what a property would sell for. It's also the least used method. ![]() Paired Sales AnalysisAppraisers can tell you a lot about the communities in which they work. They thoroughly understand the value of specific features to the people of that area. Then, the appraiser researches recent transactions in the area and finds properties which are 'comparable' to the property at hand. By assigning a dollar value to certain items such as fireplaces, room layout, appliance upgrades, additional bathrooms or bedrooms, or quality of construction, we add or subtract from each comparable's sales price so that they more accurately portray 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. At Northern Living Appraisals, we are an authority in knowing the value of real estate features in Newberry and Luce County neighborhoods. This approach to value is usually awarded the most importance when an appraisal is for a home purchase. Valuation Using the Income ApproachA third method of valuing approach to value is sometimes employed when an area has a measurable number of rental properties. In this case, the amount of income the property yields is taken into consideration along with income produced by similar properties to determine the current value. ReconciliationExamining the data from all applicable approaches, the appraiser is then ready to document an estimated market value for the subject property. Note: While this amount is probably the strongest indication of what a house is worth, it may not be the price at which the property closes. Depending on the individual circumstances of the buyer or seller, their level of urgency or a buyer's desire for that exact property, the closing price of a home can always be driven up or down.But the appraised value is often employed as a guideline for lenders who don't want to loan a buyer more money than the property is actually worth. It all comes down to this, an appraiser from Northern Living Appraisals will guarantee you attain the most accurate property value, so you can make profitable real estate decisions. |