Appraising in the real estate field is the act of valuing a real estate property by the estimate of a qualified person. This assists in predicting at how much a property would sell at the current market prices. It of great importance to the person who possess this property. An appraiser is the person who apprises the property. They get their license from the state after they have qualified to be given the license. The property in consideration for appraisal is called the subject property.
The appraiser must not be tied to the people who are transacting the property in any way. They should not be a person who will be benefiting financially as the result of the transaction that is going to occur. Appraisals are also used by lenders when lending money to the property owner. The appraisal is used as a security by borrowers to get money from banks and other financial organizations. The amount of money that a money lender offers to the borrower is determined by the amount stated in the appraisal as the value of the property.
The appraisal contains details about the property in picture and it also gives information about related properties. It also provides information about the real estate market in the area surrounding the subject property. It gives more information on the neighborhood where this subject property is located. This includes stating the social amenities surrounding, whether the area is already grown or whether it is a developing area and other key details. The appraisal states also the time the property would stay in the market when it comes to the time of selling it.
There are two major approaches of carrying out appraisal which include sales comparison and cost approach. Sales comparison method involves coming up with the value of the subject property according to the prices at which other similar properties have sold at. These other similar properties are referred to as comparables. The cost approach is mostly used for new properties.
This is mostly due to the fact that the cost of the subject property is known when the property is new. Therefore the property is valued at the cost which the owner were to destroy the building and reconstruct it again.
If the result of the process is a low appraisal, the owner needs not to worry since the appraising team will guide the owner on steps to take in order to improve the appraisal.
Problems may be noticed during the appraisal process: these too should not worry the owner because they can also be attended to and eventually be amended. For this reason, a property holder should not hold back when it comes to seeking for appraisal services since all problems are correctable.