Real Property Appraisal: A primer

When you lose a loved one it is a time to grieve and focus on family. When it comes time to take care of the estate it might be a time for property appraisal for the estate. Thankfully, trained professionals can help you through this process.

Getting an estate or trust appraisal generally involves a panel of professionals who have often worked together in the past. The real estate broker works for the interested of buyer and seller. The bank steps in to fulfill their role of bankrolling the entire transaction. Then the title company must gain a clear title so it may be passed from seller to buyer.

How do you know that the value of the property and the listing price are equal? This is the role of the appraiser. Our role is to give an impartial estimation of what the seller will be paid and the buyer can expect to pay, while keeping both parties updated. An expert certified appraiser from the The Appraising Group will make sure that all interested parties are well informed.

INSPECTING THE SUBJECT PROPERTY

The Home Appraisal Groups first goal is to inspect the home with the goal of learning its current state. It is our job to physically inspect all parts of the property including amenities, number of bedrooms and bathrooms and anything else relevant to the property. We must make sure each element is in the home and assess the condition of each. To ensure that the size is correctly conveyed and to highlight the layout of the home, the inspector may create a sketch of the homes floor plan. One of our biggest concerns is to note any defects or problems areas that are detected that might effect the property valuation.

Upon completion of the site inspection, the next step is to apply a few different approaches to determine the actual value of the property. We use a combination of paired sales analysis, a replacement cost calculation, and an income approach to arrive at a final number.

ANALYZING COMPARABLE SALES

Whether or not you are familiar with the community, when appraising for an estate or trust, our appraisers are experts. They know which home features are important to people in that specific community. Our team of experts combines this understanding with a list of sales of properties that closely resemble yours. They are also experts at calculating the value of specific features of the property like the size of the home, kitchen or bath updates, renovations that have been made, and anything else that adds value. By comparing this information with the prices of recent sales, we arrive at the best price for the property.

  • If a comparable home has recently been updated with a top of the line new roof, and the subject property has a twenty-year-old roof, the appraiser will subtract the value of the roof from the valuation of the subject property.
  • But, if the subject property has the updated roof, that extra value will be added to the price of the comparable home.

We at The Appraising Group specialize in knowing the true value of home features in Pennsylvania. We understand what truly adds value to your property.

COST
APPROACH

The cost approach includes an analysis of building costs in your community, as well as labor costs and other relevant information. This leads to a price for what it would cost should you build this same house today. That price can then be used as the highest cost the property might sell for. The cost approach is not a commonly used approach.

VALUATION USING THE INCOME APPROACH

Another option to determine the value of a house is to use rental home prices in your community. By using this method, the value of income the property receives is compared with the income of nearby rentals to arrive at a value.

ARRIVING AT VALUE CONCLUSION

Each of these pieces of information helps the appraiser determine the best market value for the property in question. While this price not be the specific selling price, it gives you a fair and unbiased value that the property may sell for. There are many factors that can drive a price above or below the valuation like the urgency of a potential buyer. The value at the end of the report also helps to outline for the bank how much they should reasonably loan for the property. In the end, one of the professionals at The Appraising Group give their commitment that you are receiving a fair price for the property included in the trust or estate.