Real Property Appraisal: A primer
You may need an appraisal of your rural property for a number of very important reasons. Whether you are in the process of a tax assessment or you are considering selling, this information is invaluable. By making sure you have the right people on your team you can be sure you get the information you need.
When appraising a rural property, the parties involved generally work together with ease. We are all familiar with the role of the real estate agent. Next, the chosen bank must fulfill their obligation in providing the capital required for the transaction. Lastly, the title company evaluates whether all of the necessary steps have been taken and makes sure that the title is clear to be transferred.
Which party is responsible for ensuring that the purchase price and the appraisal value are equivalent? The appraiser. We give you a fair estimate of what you can expect to pay or receive, depending upon your role as buyer or seller, with all the information you need. One of the pros at The Appraising Group will work with you to get you all the information you need.
INSPECTING THE SUBJECT PROPERTY
Our first responsibility is to examine the land and home to gather information on its existing status. During this land appraisal it is our job to inspect several aspects of the property, including the location, the property, all buildings on the property and details of the home like the number of bedrooms and bathrooms. Using a sketch is one way that some assessors show the actual square footage, layout and floor plan of a property. A high priority for the assessor is to note any defects or issues that might affect the properties value.
After the inspection process finishes it is time for us to use a variety of analytical approaches to decipher the value of real property. Some of our standards include an income approach (in the case of rental properties), a paired sales evaluation, and a replacement cost calculation.
ANALYZING COMPARABLE SALES
When trying to find the value of your rural property, an appraiser is well versed in your location. They understand that what buyers are looking for may vary from other locales. By starting with a list of recent sales of similar properties they process begins. They will take into consideration the specifics of your entire property and compare that information with the prices of the comparable properties. These two parts of the process allow our experts to create a fair assessment of your property.
For example, a rural property of similar size and characteristic to the one being appraised recently sold and earned top dollar because the home was recently renovated. The property being appraised is similar on paper but the home needs serious renovations. This would detract from the valuation of the appraisal when compared with the recently sold property. If, on the other hand, the property being appraises had been given the updates, this would add to the price of the recently sold property.
At The Appraising Group we focus on the value and importance of real estate features that buyers want in Pennsylvania. This approach means that we understand what adds value to your rural property.
COST
APPROACH
The purpose of the cost method is to find the max price of the property. By adding the approximate cost of construction and labor to build the same property in the current market, you arrive at the max price of listing the property. While there are times when this method is useful, it’s use is infrequent.
VALUATION USING THE INCOME APPROACH
Another way to reach a valuation of a property is to look into the rental properties in your area. Using this method, you an expert can compare the income your property makes with the revenue generated by other rentals in the neighborhood to determine valuation.
ARRIVING AT VALUE CONCLUSION
Once the approaches have been chosen and the numbers have been crunched you will have an estimated value for your rural property. The market value you see may not reflect the final selling price as there are a number of factors that can drive the selling price up or down. This estimated market value provides the lender with an idea of how much they can reasonably loan a potential buyer. As the process comes to a close you know that The Appraising Group assessor has created a fair, unbiased valuation that gives you the information you need to make an informed decision.