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What standards do appraisers use to estimate value?
Most people are familiar with the term appraisal. In its essence
an appraisal is a valuation of your property, carried out by a qualified and
experienced individual, who is known as an appraiser.
Appraisals can be carried out for an number of reasons, but
normally they are performed at the request of a buyer who is seeking to secure
a loan from a bank or loan company, to purchase the property. All banks and
loan companies require a certified valuation of a property before they can
process a loan application.
To arrive at their valuation the appraiser will use a multitude of
methods that are available to them. These methods include some of the following
items:
Home’s size and square footage
The size (height, width,
depth i.e. volume) and the square footage of the house are important
considerations. The larger the house, the more it is worth, however size and
value are not directly proportional to one another.
Condition of the home
The condition of the home is
important, as a house that is run down on the outside and inside will not
produce a large value. The entire house is assessed, including the water
systems, electrical systems and any other items. The appraiser, during the
valuation, will note all faults and repairs that need carrying out.
Neighborhood environment
Where your property is
situated is important. No one want to live in a run down area of a city or
town, or one filled with crime. Because of this, unfortunately houses that are
in poor neighborhoods have reduced values, compared to similar houses in better
neighborhoods.
Comparable local sales
Comparable sales of houses
in the area, i.e. ones similar in size and look to your own, can provide an
accurate guide to the market value of your own property. This can influence the
overall price that the appraiser sets to your property.
Relevant historical information
Should your house have
undergone any renovations or repairs these will influence the appraisers
decision on the overall value of your house.
Sales performance and indices that forecast
future value
These items help give the
appraiser a clearer picture of the market environment and help them to give an
accurate valuation of your property, so that it will sell for the right price,
at the right time.
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Location proximity to desirable schools and
services
A person who wishes to buy a
property that has children will want it to be as close to a good school as
possible. The appraiser will look at the location of your property and decide
how the local schools and infrastructure affect your property valuation.
Experience
The appraisers own
experience can play a huge factor in the final valuation of your property.
Their track record and knowledge of the industry is vital to coming to the
right price for your home to list at.
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