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A Description of the Appraisal Process
Purchasing real estate
can be
the largest
investment
most people
might
ever
make.
Whether it's
a primary residence,
a seasonal vacation property or
a rental fixer upper, purchasing real property is
an involved financial transaction that requires multiple parties to pull it all off.
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To learn more about appraising, click here to see a short video or call us today to talk about your specific property. |
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Practically all the people participating are very familiar.
The real estate agent is the most familiar face in the transaction.
Next, the mortgage company provides the money required to fund the exchange.
Ensuring all areas of the transaction are completed and that the title is clear to pass from the seller to the purchaser is the title company.
So who's responsible for making sure the value of the real estate is consistent with the purchase price?
In comes the appraiser. We provide an unbiased estimate 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 professional Florida licensed appraiser from ASAP Appraisal Group will ensure you as an interested party are informed.
Inspecting the subject property
To determine an accurate status of the property, it's our responsibility to first complete a thorough inspection.
We must see aspects of the property first hand, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they indeed exist and are in the condition a reasonable buyer would expect them to be.
To ensure the stated size of the property is accurate and describe the layout of the house, the inspection often includes creating a sketch of the floor plan.
Most importantly, the appraiser identifies any obvious amenities - or defects - that would have an impact on the value of the property.
Once the site has been inspected, an appraiser employs two or three approaches when determining the value of the property:
paired sales analysis and, in the case of a rental property, an income approach.
Replacement Cost
This is where the appraiser pulls information on local construction costs, labor rates and other factors to ascertain how much it would cost to construct a property nearly identical to the one being appraised. This estimate often sets the maximum on what a property would sell for. The cost approach is also the least used predictor of value.
Paired Sales Analysis
Appraisers become very familiar with the subdivisions in which they work.
We thoroughly understand the value of certain features to the residents of that area.
Then, the appraiser researches recent transactions in close proximity to the subject and finds properties which are 'comparable' to the property being appraised. By assigning a dollar value to certain items such as
fireplaces, room layout, appliance upgrades, additional bathrooms or bedrooms, or quality of construction, we adjust the comparable properties so that they more accurately portray the features of subject.
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If, for example, the comparable property has an extra half bath that the subject does not, the appraiser may subtract the value of that half bath from the sales price of the comparable.
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In the case where the subject has something such as an extra half bath that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property.
A valid estimate of what the subject could sell for can only be determined once all differences between the comps and the subject have been evaluated.
This approach to value is most often given the most weight when an appraisal is for a home sale.
Valuation Using the Income Approach
In the case of income producing properties - rental houses for example - the appraiser may use an additional way of valuing real estate.
In this situation, the amount of revenue the property yields is factored in with income produced by comparable properties to derive the current value.
Reconciliation
Combining information from all approaches, the appraiser is then ready to state an estimated market value for the property in question.
The estimate of value on the appraisal report is not necessarily what's being paid for the property even though it is likely the best indication of what a property could sell for in an open market.
Prices can always be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'.
Regardless, the appraised value is often used as a guideline for lenders who don't want to loan a buyer more money than they could recover in the event they had to put the property on the market again.
It all comes down to this: An appraiser from ASAP Appraisal Group will help you attain the most accurate property value, so you can make wise real estate decisions.
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Real Estate Appraiser serving Central Florida, which includes Polk, Orange, Hillsborough, Osceola, Pasco, Pinellas and Highlands counties. Types of appraisals include: FHA, ERC, Land, Manufactured Home, Condo, Multi-Acre, Difficult/Complex and REO Appraisals.
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