Sunday, January 15, 2017

Analyzing Residential Real Estate Appraisal Philadelphia PA Report

By Janet Patterson


Residential property appraisal reports can be quite complex documents full of extensive market data and documented procedures for estimating value. For the novice, as well as the seasoned real estate professional, the reports can be difficult to understand, and most users simply look for the statement of value. This article helps takes you through insights on making sense of the reports by residential real estate appraisal Philadelphia PA.

You can see it in everyday practice. Is it just a coincidence that a size adjustment of say $30 per square foot seems to be just right in equating two or three comparables? Is that only what the market seems willing to pay (or subtract) for the difference in size, or is there something else at play here?

Common Appraisal Approach. The three approaches to effectively appraise a property are Sales Comparison, Cost, and Income Approach. In Sales Comparison Approach, the appraiser finds comparables or comps. The comparables or comps are another property in the same vicinity or location. There are no two properties exactly the same. So, the appraiser takes notes of the similarities and characteristics.

After visiting the property, the appraiser will determine the fair value of the property by considering such things as location, comparable home sales, and previous appraisals. All of the observations and research will be compiled in a detailed report, which not only states the value of the residential property, but the precise reasoning and technique of how the estimate was derived.

As for Income Approach, the appraiser checks the ability for the property to earn an income. For example, the home owner added a carport. Many tenants are willing to pay extra for the use of a carport. Let us say the home owner transform the carport into another room with kitchen and bathroom. The home owner can rent out the new room. The recent addition to the property increases the appraise value.

Being listed in MLS, if that home does end up closing at the inflated price, it will show up as a closed sale in MLS. When brokers and agents conduct a competitive market analysis of another similar home they want to list, the inflated price of the property you over appraised will enter into their research and influence the list price the agent recommends to their seller.

An employee may opt to take another position in their company. This happens to promotion. The management positions are usually at the head office. So, the company helps an employee to relocate. The employee has no idea about the fair market value of the new location. With the appraise value available, he makes a correct offer.

The residential real estate appraisal report is a critical report for the homebuyer to understand. It is an important tool in any property transaction, so make sure that you spend the time to clearly read and understand the report. During your examination, please remember - there are often errors in the report that can significantly impact any final valuation. Accordingly, your goal is to uncover any errors before it is too late.




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