An Overview of Appraisals
One's home purchase
It doesn't matter if it's
a main residence,
an additional vacation property or
an investment, purchasing real property is
an involved financial transaction that requires multiple people working in concert to pull it all off.
||To learn more about appraising, click here to see a short video or call us today to talk about your specific property.
Practically all the participants are very familiar.
The real estate agent is the most known entity in the transaction.
Next, the bank provides the money required to bankroll the exchange.
Ensuring all details of the exchange are completed and that a clear title passes to the buyer from the seller is the title company.
So what party makes sure the real estate is consistent with the purchase price?
In comes the appraiser. We provide an unbiased estimate of what a buyer could expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional Kentucky licensed appraiser from Jennifer Galloway
will ensure you as an interested party are informed.
Inspecting the subject property
Our first responsibility at Jennifer Galloway
is to inspect the property to determine its true status.
We must physically view aspects of the property, such as the number of bedrooms and bathrooms, the location, and so on, to ensure they indeed are present and are in the shape a typical buyer would expect them to be.
To ensure the stated square footage has not been misrepresented and describe the layout of the home, the inspection often entails creating a sketch of the floor plan.
Most importantly, we look for any obvious features - or defects - that would affect the value of the property.
Next, after the inspection, we use two or three approaches when determining the value of the property:
a sales comparison, a replacement cost calculation, and an income approach when rental properties are prevalent.
This is where we pull information on local building costs, labor rates and other elements to figure out how much it would cost to build a property nearly identical to the one being appraised. This figure often sets the maximum on what a property would sell for. The cost approach is also the least used method.
Analyzing Comparable Sales
Appraisers get to know the communities in which they work.
We thoroughly understand the value of certain features to the homeowners of that area.
Then, the appraiser researches recent transactions in close proximity to the subject and finds properties which are 'comparable' to the subject in question. Using knowledge of the value of certain items such as
remodeled rooms, types of flooring, energy efficient items, patios and porches, or extra storage space, we adjust the comparable properties so that they more accurately match the features of subject.
At Jennifer Galloway
, we are an authority in knowing the value of particular items in Ashland and Boyd County neighborhoods.
This approach to value is most often awarded the most weight when an appraisal is for a real estate purchase.
For example, if the comparable has an irrigation system and the subject does not, the appraiser may deduct the value of an irrigation system from the sales price of the comparable home.
In the case where the subject has something such as an extra half bath that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property.
Valuation Using the Income Approach
In the case of income producing properties - rental houses for example - we may use a third approach to value.
In this case, the amount of income the property produces is factored in with other rents in the area for comparable properties to give an indicator of the current value.
Putting It All Together
Examining the data from all applicable approaches, the appraiser is then ready to document an estimated market value for the subject property.
The estimate of value on the appraisal report is not always what's being paid for the property even though it is likely the best indication of a property's market value
It's not uncommon for prices to be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'.
But the appraised value is typically used as a guideline for lenders who don't want to loan a buyer more money than they could recover in case they had to sell the property again.
Here's what it all boils down to: An appraiser from Jennifer Galloway
will help you attain the most accurate property value, so you can make wise real estate decisions.
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