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
Michelle Plunkett, Associate Broker
It's simple, really. Help people. Each client is unique. Every situation deserves special attention. Each home, neighborhood and community is a perfect fit for someone. Whether you are part of a grieving family settling an estate, 1st time home buyer, Upsizing, simplifying or find yourself starting a new life chapter, I am eager to understand your needs, provide you with options, guide you along and help you to make insightful, shrewd decisions. What journey do you find yourself embarking on? I would love to share the adventure with you - keeping it exciting, fun and rewarding! I am a FULL TIME Realtor - working my schedule to fit with your lifestyle and adapting to your technological abilities. Together we can make it happen! In appreciation for your business and in keeping with the spirit of thankfulness to the community that has supported me along the way, a portion of each commission is donated to charity.
