What Is an Appraisal?
Their home's purchase is the biggest transaction many might ever consider. Whether it's a primary residence, a seasonal vacation property or an investment, the purchase of real property is a complex financial transaction that requires multiple parties to see it through.
The majority of the people involved are very familiar. The real estate agent is the most familiar person in the transaction. Then, the lender provides the money needed to finance the exchange. And ensuring all details of the transaction are completed and that the title is clear to pass to the buyer from the seller is the title company.
So, who makes 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 might expect to pay — or a seller receive — for a property, where both buyer and seller are informed parties. A professional appraiser from Appraisals Niagara Real Estate Appraisers Inc. will ensure, you as an interested party, are informed.
Inspecting the subject property
Our first duty at Appraisals Niagara Real Estate Appraisers Inc. is to inspect the property to determine its true status. We must actually view features, such as the number of bedrooms and bathrooms, the location, living areas, etc, to ensure they truly are there and are in the condition a typical buyer would expect them to be. To ensure the stated square footage is accurate and convey the layout of the house, the inspection often entails 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, we use 2 to 3 approaches to determining the value of the property: sales comparison, cost approach to value and, in the case of a rental property, a market rent report could be included.
This is where the appraiser pulls information on local building costs, the cost of labor and other factors to calculate how much it would cost to build a property comparable to the one being appraised. This figure often sets the maximum on what a property would sell for. The cost approach is also the least used method.
Analyzing Comparable Sales
Appraisers are intimately familiar with the subdivisions in which they work. They 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 at hand. By assigning a dollar value to 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 more accurately portray the features of subject.
An opinion of what the subject could sell for can only be determined once all differences between the comps and the subject have been evaluated. At Appraisals Niagara Real Estate Appraisers Inc., we are an authority when it comes to knowing the worth of particular items in Niagara Falls and the surrounding Niagara Region. This approach to value is usually awarded the most importance when an appraisal is for a home purchase.
Valuation Using the Income Approach
A third method of valuing a house is sometimes used when a neighborhood has a measurable number of renter occupied properties. In this case, the amount of revenue the real estate generates is factored in with income produced by neighboring properties to derive the current value.
The Bottom Line
Analyzing the data from all approaches, the appraiser is then ready to put down an estimated market value for the property at hand. It is important to note that while the appraised value is probably the best indication of what a property is worth, it may not be the final sales price. Depending on the specific 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.Regardless, the appraised value is typically used as a guideline for lenders who don't want to loan a buyer more money than the property is actually worth. The bottom line is, an appraiser from Appraisals Niagara Real Estate Appraisers Inc. will help you discover the most fair and balanced property value, so you can make profitable real estate decisions.