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Real Estate Appraisal

What is Real Estate Appraisal

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All home owners have bought at least one, but many people do not know what a real estate appraisal is, beyond the basic thought that it is how financial institutions determine how much a piece of property is worth. However, a little knowledge can help the consumer understand the process and maximize their purchase.

Essentially, a real estate appraisal is the process whereby an uninvolved third party develops an opinion of the value of a piece of property, based upon that property’s “highest and best use”. That means essentially when the property is being used in the best way it can be under the current circumstances. A number of factors go into developing this opinion, but that is sometimes a surprising key fact – it is just an opinion. It is an educated opinion, formulated with market based facts, but an opinion still. If you obtain multiple real estate appraisals on the same property at the same time, you will likely get a different value from each. While they should be relatively close to each other, unless the appraisers are just using one of the automated services, there will be differences of opinion.

An appraisal takes into consideration a multitude of factors. The most influential factors are comparable sales, often referred to as “comps”, and the current condition of the property. Comps are valuable, because they give a factual real-world view of what similar properties have sold for in the same market recently. However, two identical properties, one meticulously kept and the other run down, will not sell for the same amount. So, a real estate appraisal will be delivered as a range, and your actual target price will be determined by the condition of the particular property.

Real Estate Appraisal – Getting It Right!

One of the important steps you will take when buying or selling a home is having a real estate appraisal done on the property. During this process, the approximate value of the home or property is determined. The lender providing the funds for the mortgage on the property will request an appraisal on the property. This is done so that the lender will know for sure that the property will sell for the amount they are lending or more.

To get the best real estate appraisal, make sure that you are working with an appraiser who holds a license in the state where the property is located. Often your lender will have an appraiser on their staff, but you do not always have to use this appraiser. If, however, your lender does not trust the appraiser you choose, they can question the findings before approving your loan. The cost for the appraisal will be built into the closing cost on the loan.

When getting your real estate appraisal, make sure that the appraiser has no financial connection to the sale of the property. The appraiser should not stand to benefit in any way from a sale or non-sale of the property. This is crucial to getting a fair appraisal.

There are two main ways to approach a real estate appraisal. If you are having a pre-owned property appraised, you will want to use a sales comparison appraisal. This type of appraisal will compare the potential sale value with that of similar homes in the area. The second type of real estate appraisal is a cost appraisal, which is most often used in new properties. This appraisal estimates the cost to rebuild the property should it be destroyed.

Real Estate Appraisal Choices

A real estate appraisal gives you the approximate value of the home or property you own or are looking to buy. The tricky thing about appraisals is that they vary! This means that an appraisal may not give you the same value for your home as a second appraisal. In fact, the type of appraisal you seek could drastically change the results you receive. There are three main real estate appraisal choices you can choose from if you are in the position where you need to have a property appraised. You can have the value of your property determined using the sales comparison approach, cost approach, or income approach.

The most commonly used real estate appraisal for a previously owned residential property that is going on the market is the sales comparison approach. This approach compares the property to others that have similar features in similar areas and have recently successfully sold. The comparison approach is considered to be accurate in predicting an approximate sale price since it relies not only on the property itself, but also on current market trends. However, the appraiser must choose good homes to compare the property to, and also the comparison homes must be in a similar area and neighborhood.

The second approach to a real estate appraisal is the cost approach. This approach is commonly used on newly built properties, where it is relatively easy to determine the cost to replace the structure, since the materials are new. That is exactly what the cost approach quotes – the cost necessary to rebuild the property should it be destroyed. This is challenging to calculate with a previously owned property, because the appraiser has to factor in depreciation and any materials that are not available any more.

Finally, property can be appraised based on the income approach. This approach to a real estate appraisal is most often used for commercial properties. It attempts to predict the income that will come in from the property, as well as the present value of the property itself. This approach is not used on residential properties, since they do not stand to bring in income.

Real Estate Appraisal Considerations

A real estate appraisal is typically done when a home is being sold, when someone is refinancing, or after improvements have been made to the property that the owner feels will increase the value of the home. When having a real estate appraisal done on your property or a property that you are in the process of buying there are several things that you must consider.

First, land value is always something that should be considered when you have a real estate appraisal done on any property. The improvements, or structure, to any one property are usually just a small portion of the overall value of the home. Make sure that you know and understand the value of the actual land of a home that you are buying or selling.

If you are buying a home or property and the seller has a real estate appraisal done and it seems awfully high you may want to consider paying an appraiser yourself. This is not unheard of when you believe that a property is not worth it’s appraised price. If you are a seller and your home was not appraised as high as you would like you must take into consideration that you will not get every dollar that you put into the house out of it when you sell it.

There are many things to consider when having a real estate investment done. It’s always good to hire a reputable appraiser and really look over the numbers when you get them from a real estate appraisal. If anything seems inaccurate, be sure to question it so that you are sure that you get the best deal for yourself, whether you are a buyer or a seller.

Real Estate Appraisal for the Purchaser

Whenever you purchase a home or any property, it is important to have a real estate appraisal done. An appraisal will tell you how much your purchase is worth right now. This is an important piece of information when you are buying any property, because you want to be sure that your offer is not more than the actual worth of the property. The beauty of it is that the property that gets a real estate appraisal can help you determine if you are paying too much for a property, and it will also give you an idea of what else you can do to the home to increase its value.

A real estate appraisal is usually required if the purchase is being financed by a bank or real estate lender. The reason for this is that a lender needs to know how much your property is worth so that they can be sure that they do not finance you for more than the property is worth. Most lenders will not allow you to close the deal on the property until a real estate investment is done.

As the purchaser you should be sure to look into what the real estate appraisal comes in at. If your offer is just a few dollars less than the appraised value you may want to think about lowering your offer just a bit. Also, if you have any question as to whether the appraisal is accurate you should have another one done.

Real Estate Appraisal for the Vendor

Before a real estate vendor can successfully sell any given property, they would need an accurate estimation of the property’s value. Such property appraisals need to be carried out by a licensed real estate appraisal agent in the respective state. By law, all real estate appraisers must be fully qualified before they can engage in any commercial activity. Real estate appraisal is aimed at assessing the physical, legal and economical feasibility of a given property in order to estimate the best price, which the property can be sold. When it comes to real estate appraisal, vendors need to understand the difference between price and market value. The price of the property basically refers to the historical value of the property at the time it was purchased. However, the market value is a completely different concept entirely. The market value of a property refers to the constantly fluctuating value of any given property.

Furthermore, in real estate appraisal it should be noted that there are different types of property valuation methods. These include the investment, comparable, development/residual, accounts and contractor’s methods. The method of valuation used will depend on the respective state. The concept of highest and best use is of particular importance when it comes to understanding real estate appraisal. This term refers to the best potential use of a property, which will yield the highest possible market value. In any case, it is also worth mentioning that improving a property will invariable tend to increase the market value of the property.

Real Estate Appraisal is Important

Whether buying, selling, or refinancing your home, a real estate appraisal is an important part of the process. It is not simply just another expense in the process, it is a validation for all parties that the deal is sound, and that nobody will wake up the next morning feeling sorry for what they have done.

We need to face reality. As a homeowner, most of us will have an emotional perspective when we consider the value of our current, or “we hope to soon be our current” home. That emotion can get you in all sorts of trouble, and set you up for disappointment. In order to avoid over-financing, or under-pricing, we need a real estate appraisal.

A real estate appraisal is simply an unemotional look at the property by an unattached professional, and takes into consideration factors that most homeowners would not. We tend to base our opinion on something like what the neighbor got for their house, and how much better we know our house to be than theirs was. Or, we err on the side of just knowing there is no way in the world that our house is worth so much! But the fact is, without knowing the market conditions and key data, we really have no good idea what a property is worth.

That is where a real estate appraisal comes in. In many cases, it is a required part of the transaction anyway, so you should just plan on it. However, if you are interested in obtaining the most accurate real estate appraisal you can, you need to control the selection process. Whoever selects the appraiser has the opportunity to choose one in whom they can have confidence.

Real Estate Appraisals - The Right Company

If you are planning to sell your home or other real property, you should consider having a real estate appraisal by a licensed professional appraiser. There are several reasons to be sure you get a good real estate appraisal. The primary benefit to having a professional appraisal is that the average time it takes to sell an appraised property is markedly less than for property that has not been appraised. Also, a licensed appraiser will meet state and federal requirements for education and experience.

When choosing a real estate appraisal company, there are several things to keep in mind to ensure you make the right choice. You can begin online to find an appraiser in your state and vicinity. As you do your online research, you will want to seek a company that has proper knowledge of the neighborhood and type of property you want to sell. You do not want a real estate appraisal by a company that cuts costs of operating by not paying for the best available data. This is especially true if your property is unusual.

You may want to do some comparison shopping for the best fee, once you have determined that there is more than one real estate appraisal company in your area that meets your needs. Fees may vary from one company to the next, particularly if your property is more complex. Residential real estate appraisals will likely be more similar from company to company, but that may not be so, if your property is commercial or unusual. Also important to research when doing your comparisons, is a company’s success rate in turnaround times. Your aim in securing a real estate appraisal is to get the best possible price for your property in the least amount of time.

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