Real-estate appraisal

A real-estate appraisal is an unbiased assessment of the value of the property in question by a third party.

An appraiser will look at the property inside and out and research similar properties in the surrounding  area in order to determine its market value.

Interested in property investment? Real-estate appraisers can help

In any type of real-estate transaction, the most important element is the price of the property.

A real-estate appraiser is hired to determine the market value of the property. This appraisal will provide detailed information about a property for which a loan is being sought. To obtain an accurate estimate, the appraiser must conduct a comparative market analysis. This is the only kind of evaluation report that a bank will accept when deciding whether or not to lend the money.

Getting a real-estate appraisal is an essential step that one must take prior to investing in a property.  Because buying a new home is such an important life decision, potential homeowners should always get a house appraised by a professional so that they don’t end up paying more than the house is worth.  The bottom line is that people need to be aware of a property’s value before making one of the biggest purchases of a lifetime.  Thus, proper appraisal is one of the most important components of any real-estate transaction.

Methods of real-estate appraisal:

Different methods for real-estate appraisal

• The sales comparison method of real-estate appraisal estimates market value by comparing the property to similar properties that have been sold in the same area. By doing so, appraisers can arrive at various estimations of what these other properties would have sold for if they had had the same features as the property in question. This is the most frequently used method of appraising residential real estates, because it is considered the most accurate.
• The second method is the cost-based method. This method of real-estate appraisal is generally used for new properties when the costs of construction are known. In this method, the appraiser estimates how much it would cost to replace the structure if it were destroyed. The cost method also takes into account the estimated cost of improvements to the property, as well as other factors such as the expected decline in quality of the materials used, and then calculates the value of the land and house based on this information.
• The income method of real-estate appraisal is mainly used for properties that contribute towards an income. This method of real-estate appraisal primarily considers the amount of income that the real-estate investment will render. Real-estate appraisals of rental properties are not the same as appraisals of single-family homes. The method used for appraising rental properties is called the capitalization method.  Appraisers using this method take into account the income that the property would fetch in order to calculate the real worth of the estate. The rate of return anticipated by investors in a given area is directly related to the capitalization rate, and this is what is used to correctly appraise an income property.