General Appraisal Questions
Virginia Beach, Norfolk, Chesapeake, Hampton, Suffolk, Portsmouth, Newport News, Poquoson, York County and Williamsburg.
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Over 15 years of experience appraising residential properties.
First the appraiser measures and inspects the exterior of the home. Then the appraiser inspects the interior of the home. The appraiser is looking at the features or defects that would affect the value of the home including the number of bedroom and bathrooms, the materials in which the home was built, the condition and any updates and upgrades. This typically takes under an hour, sometimes longer for larger or more complex properties.
The cost approach entails figuring out how much it would cost to replace the property's improvements, accounting for any physical wear and tear as well as other aspects, and then adding the land's value. This method is frequently employed to determine the worth of a house that has just been built or just underwent extensive renovations.
The Sales Comparison Approach compares the subject property to recently sold comparable homes in the neighborhood. As it is based on real sales data and is widely regarded as the most reliable predictor of value, this method is most frequently used to calculate the probable sales price of a house.
The Income Approach is typically used to assess properties that generate income, such commercial buildings or rental properties. It entails calculating the amount an investor would be ready to pay in light of the possible revenue from the property. This strategy is predicated on the notion that an investor will buy a property in the hope of profiting from the property's potential for generating an income.
The lender orders the appraisal to get a clear description of the property and an unbiased opinion of how much it is worth. The lender uses the appraisal to prove that the property is a good form of collateral and to figure out if the property's value is high enough to support the decision to lend.
The appraiser looks at market data, public records, and talks to buyers, sellers, and real estate agents in the market area. Some of the things that were looked into were the sales, leases, and current listings of similar properties. Other information includes land sales and the cost of building a house. After thinking about all the things that affect the value, the appraiser comes up with a value opinion and writes up an appraisal report.
If the appraiser knows more about your property, he or she will be able to come up with a more accurate result. The appraiser will want to know if there are any private agreements or restrictions, easements or rights of way, encroachments, "agreed to" arrangements with neighbors (like fences or walls), etc., on the property. The appraiser might ask about the property's ownership, its history of sales and rentals, and who lives there. He or she might ask if there is an agreement or option to buy or sell the property, and if so, what the agreement or option says. If the property has been sold in the last three years, the appraiser may want to know more about the transactions. Last, the appraiser may ask about the property's physical features, such as any additions, permits, etc.
If you hire the appraiser yourself, he or she will want to know what the appraisal is going to be used for. (Note: If you hire an appraiser to do an appraisal for a federally-related transaction, the lender or the lender's agent must hire the appraiser.)
The appraiser decides whether an interior and/or exterior inspection or no inspection is needed based on how the client plans to use the appraisal. In many cases, the lender will want a full inspection of the property, including both the outside and the inside.
If a full inspection is needed, the appraiser looks at the site, any changes made to the site, and any changes made to the building. The appraiser takes into account the site's size, shape, topography, drainage, and anything else that might affect its value. He or she looks at the improvements to the site, like paving, fences and walls, and landscaping, to figure out how much value they add to the property. Last, the appraiser looks at any buildings. Some of the things that are taken into account are the building's style, size, number of floors, and number of rooms (including bedrooms and baths, etc). He or she looks at the structure's condition to help figure out how much it has lost value. Also, the appraiser looks at the property as a whole, including the house, any other improvements, and any visible problems (like power lines or encroachments). Lastly, the appraiser looks at how the property fits in with the rest of the area.
A home inspection is not the same as an inspection done by an appraiser. An appraiser collects information to come up with a value opinion, while a home inspector collects information to find out about the building's features, its structural integrity, and any repairs that need to be done.
A comparable sale is a recent sale of a property that is similar to the subject property in terms of how it looks, how it works, and where it is. A comparable listing is a current listing that is similar to the subject property in terms of physical and functional features and location. In the sales comparison method, similar sales and listings are used. Most of the time, the sales comparison method is the most accurate way to figure out how much a house is worth because it shows how buyers and sellers act in the market.
An appraiser looks at recent sales of similar properties to figure out how much a property is worth. In general, the sales of properties that are most similar to the one being valued are the best ways to figure out its value. But since no two properties are exactly the same, the appraiser must take into account the differences between the property that sold and the property being appraised.
Adjustments are what we call these changes. Adjustments are made to the sale prices of similar properties by adding or taking away adjustments. This gives an adjusted sale price for the property being appraised.
The cost approach is based on the premise that an informed purchaser would not pay more for it than it would cost to build a similar property with the same utility. There are big differences between the sales comparison approach and the cost approach when the property being appraised has older improvements that are hard to estimate for depreciation and functional obsolescence, or when the improvements are very unique or specialized and there aren't many similar properties. If everything is done right, the suggested value from the cost approach should be about the same as the estimated value from the sales comparison approach.
Most of the time, yes. The income method is based on how the expected benefits (dollar income) relate to the value. The income approach is usually not much more than a gross rent multiplier analysis, which is the sale price of a property divided by how much money it could make. In markets where homes are rented out and sold a lot, the gross rent multiplier analysis is a very reliable tool.
But the income approach can't be used when the property being appraised is in a neighborhood where most homes are owned by the people who live in them.
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