Real estate appraising is an exercise that involves establishing the market value of a real property. This assists in predicting at how much a property would sell at the current market prices. This greatly helps the person who is possession of the property. The person who does the work of appraising the real property is called an appraiser. They get their license from the state after they have qualified to be given the license. The subject property is the real property being appraised.
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. An appraisal is important to a lender who is lending money to the individual who owns the property. The owner uses the appraisal as a security to obtain a loan from money lenders. Lenders are guided by the amount stated in the appraisal to know the amount that they will lend to the borrower.
In the appraisal, there are details about the subject property and also comparisons other similar properties currently in the market. It also contains an analysis of the prevailing real estate market. The appraisal document also gives details about the area which the subject property is situated. 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 also includes the estimated time that the property would take to sell.
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. Comparables is the name given to these other similar properties that the subject property is compared with. 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.
Sometimes the appraisal might be low but the one should not worry since they are given certain procedures to follow in order to step up the appraisal.
Also, some problems may be identified with the subject property but this too can be well taken care of. For this reason, a property holder should not hold back when it comes to seeking for appraisal services since all problems are correctable.