First, let us quickly discuss – what is real estate appraisal?
A real estate appraisal, also known as property valuation or land valuation – is the act of evaluating a land and set its current market value depending on the current market condition of the area. The process of land valuation is usually done when there are current buyers of the property or that sellers need to set the right price of the property to gain prospects for the property while gaining home value as well.
Appraisal affects mortgage rates.
Home valuation also affects a mortgage. Lenders make use of the property appraisal data to determine how much they are willing to give the lendee. An appraisal is actually an opinion of an individual regarding the value of your home. Anyone can give their own appraised value of the property, but only certified appraisers can give valid valuation of the house. They are professionals who do home valuation with impartiality, and determines the value of the home using several factors that complies with their professional standards, complete with written reports. Such are the same with real estate appraisals in California and other US states.
What are the processes involved in real estate appraisals?
There are primarily 2 involved processes in property appraising.
1. Sales comparison approach
2. Cost Approach
The sales comparison approach uses other sold properties within the area and analyses the components of the property along with the properties or what is also called the comparables. Through analysis of the components will the certified appraiser come up with the value of the property, wherein both the buyer and seller will have to agree. Note that there should be at least 4 comparables used, so that the components being checked is the same with the property.
The cost approach is used mostly for newly built or acquired properties. It solely based its valuations through the reproduction costs. The appraiser estimates everything that will contribute to the property which includes the land where the property will be built into.
Ensure the overall maintenance of your property before appraising it. It helps a lot in getting a good valuation from appraisers and therefore, affects the price value of your property when you sell it.
Having a home inspection can also be a good idea, before getting the home appraisal. This helps you determine what components of the property you need to fix or remodel – which somehow affect the value of your property.