Appraisals are done often in real estate and are a vital part of determining property value. Knowing the basics can be beneficial no matter what stage of property ownership you fall into.
How does an appraisal work?
An appraisal is done by a licensed professional to thoroughly examine a property to figure out its value. During the appraisal process, the appraiser inspects the structural quality, comparable local homes for sale on the market, checks for safety hazards and more to determine the property value.
What fails a home appraisal?
If an appraisal comes back low, do not fret, as there are several options to fix the issue. First, it’s vital to determine the cause of the low appraised value. This may include figuring out if recent data was used in relation to the local comparable properties, if repairs need to be done or if market conditions are at play.
Things such as a hot real estate market can put a strain on local appraisers, so sometimes in these conditions the job is rushed - not giving an accurate estimate.
What are the three types of appraisals?
There are three main appraisal approaches used in the world of real estate. These methods include:
- Cost approach: The cost a buyer would pay for a property should be equivalent to the cost of building a similar structure.
- Sales comparison: Property value is determined by comparing similar local properties in a similar real estate market.
- Income approach: Investors estimate the income a property could potentially bring in to see if it’s worth funding.
If you feel like an appraisal is incorrect, it’s best to do research on the local market and work closely with an appraiser for the best results.
About the Author
Raena Everett
Raena has an exceptionally positive outlook on life. She believes every day presents a new and exciting adventure. She also applies this attitude towards her work. She was raised in Bangor, Maine until she moved to Venice in 2011. She graduated from the University of Maine at Orono with a bachelors degree in public management. She has been an entrepreneur her entire life, owning several small businesses in Maine. She contributes her success to her problem solving skills and her commitment to excellent customer service. These skills will easily carry over to her real estate career. Her market knowledge and customer service will provide great service to her real estate clients.
She is currently a Realtor(R) for Coldwell Banker Residential Real Estate in the Venice office.
