What Are the Components of an Appraisal?A home purchase is the most important financial decision many may ever make. Whether it's where you raise your family, a seasonal vacation home or an investment, the purchase of real property is a complex transaction that requires multiple parties to see it through. The majority of the participants are very familiar. The real estate agent is the most familiar entity in the exchange. Next, the mortgage company provides the financial capital necessary to bankroll the exchange. The title company sees to it that all details of the exchange are completed and that the title is clear to transfer from the seller to the buyer. So, what party is responsible for making sure the value of the property is in line with the amount being paid? In comes the appraiser. We provide an unbiased opinion of what a buyer could expect to pay — or a seller receive — for a property, where both buyer and seller are informed parties. A licensed, certified, professional appraiser from Appraisal Services by Dave, LLC will ensure, you as an interested party, are informed. The inspection is where an appraisal startsOur first responsibility at Appraisal Services by Dave, LLC is to inspect the property to determine its true status. We must see features hands on, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they really are there and are in the condition a reasonable buyer would expect them to be. To ensure the stated square footage is accurate and illustrate the layout of the property, the inspection often entails creating a sketch of the floorplan. Most importantly, we look for any obvious features - or defects - that would affect the value of the house. Next, after the inspection, we use two or three approaches to determining the value of real property: sales comparison and, in the case of a rental property, an income approach. 
Replacement CostHere, we gather information on local construction costs, labor rates and other factors to derive how much it would cost to replace the property being appraised. This estimate often sets the maximum on what a property would sell for. The cost approach is also the least used method. 
Sales ComparisonAppraisers are intimately familiar with the subdivisions in which they work. They innately understand the value of particular features to the residents of that area. Then, the appraiser looks up recent sales in close proximity to the subject and finds properties which are 'comparable' to the property at hand. Using knowledge of the value of certain items such as upgraded appliances, extra bathrooms, additional living area, quality of construction, lot size, we add or subtract from each comparable's sales price so that they more accurately match the features of subject.
A true estimate of what the subject might sell for can only be determined once all differences between the comps and the subject have been evaluated. At Appraisal Services by Dave, LLC, we are an authority in knowing the value of real estate features in West Mifflin and Allegheny County neighborhoods. This approach to value is commonly given the most importance when an appraisal is for a real estate purchase. Valuation Using the Income ApproachIn the case of income producing properties - rental houses for example - the appraiser may use a third method of valuing a property. In this situation, the amount of revenue the real estate produces is taken into consideration along with other rents in the area for comparable properties to determine the current value. Coming Up With The Final Value
Analyzing the data from all applicable approaches, the appraiser is then ready to state an estimated market value for the property at hand. It is important to note that 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 situations 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 used 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 Appraisal Services by Dave, LLC will guarantee you attain the most fair and balanced property value, so you can make wise real estate decisions.
Appraisal Services by Dave, LLC David M. Yanichko, SRA Serving Allegheny, Washington and Westmoreland Counties EMAIL: appsbydave@comcast.net |