Property Appraisals

Creating property appraisals is “The act or process of developing an opinion of value” and is a procedure for determining an asset’s value using multi-faceted appraisal, rather than relying only on historical market transaction pricing.  A trained professional Appraisor will use industry standard methods to determine your property’s fair market value.

Below are the primary standardized methods:

• Sales Comparison Method: The comparison method is the most common and is used to value a property based on a comparison to the recent selling prices of similar properties in the same neighborhood. Typically, at least three comparable properties are reviewed, and adjustments made for differences. The “comparables” must be from sales or purchases reported within the last year on the open market.
• Cost Method: This method assumes that a property’s value will be equal to the cost of building an equivalent home or building. The costs of the land and construction are considered, less depreciation.
• Income Method: This method uses the capitalization of income and provides an estimate for the value of a property based on the income it produces. The income capitalizaion is established by calculating the net operating income (actual or estimated revenue minus operating expenses), and dividing it by the capitalization rate, to achieve the expected rate of return.

A dollar value is reached and assigned based on factors such as the asset’s cost, the income it generates, and its fair market value comparison to similar assets.

Appraisals are essentially educated guesses as to the price assets would fetch in a free market.

Different appraisers could attach different prices to your home. Although appraisals are based on past sales data, given the time and resources, you will definitely want to increase your homes appeal and it’s market value.

Appraisals are primarily used to protect the lender’s interest in the property and and they don’t like to make loans on properties for more than they’re worth. Appraisals are many times the best tool to assess your property’s value, especially when there is a lack of real estate sales activity in your area.

If the buyer’s mortgage will be insured through the FHA, the appraiser must disclose potential problems relating to the physical condition of the home. There are typically no similar stipulations for non-FHA mortgages.

I can refer an appraiser(s) for your home. Also, the Appraisal Subcommittee of the Federal Financial Institutions Examination Council offers a member directory on its website. You can also check the status of Arizona appraisers’ licenses through the Real Estate Appraisers website.

If you don’t wish to purchase an appraisal at this time, I can supply a comparative market analysis (CMA), which provides information on recent selling prices of similar properties in the same market. With a CMA, you can estimate the value of your home.

Please contact me if you’re interested in obtaining CMA prior to selling, or buying real estate.