One's home purchase
is
the most significant
transaction
most of us
could
ever
encounter.
Whether it's
a main residence,
a seasonal vacation home or
an investment, purchasing real property is
a detailed transaction that requires multiple people working in concert to make it all happen.
To learn more about appraising, click here to see a short video or call us today to talk about your specific property.
It's likely you are familiar with the parties having a role in the transaction.
The most recognizable entity in the transaction is the real estate agent.
Next, the lender provides the money required to fund the exchange.
Ensuring all areas of the sale are completed and that the title is clear to transfer to the buyer from the seller is the title company.
So who's responsible for making sure the value of the real estate is consistent with the purchase price?
In comes the appraiser. We provide an unbiased opinion 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 Oklahoma licensed appraiser from Accredited Appraisal Services / Home Values Tulsa will ensure you as an interested party are informed.
Appraisals start with the property inspection
Our first responsibility at Accredited Appraisal Services / Home Values Tulsa is to inspect the property to determine its true status.
We must actually see aspects of the property, such as the number of bedrooms and bathrooms, the location, living areas, etc., to ensure they truly exist and are in the shape a reasonable buyer would expect them to be.
The inspection often includes a sketch of the floor plan, ensuring the square footage is proper and illustrating the layout of the property.
Most importantly, the appraiser identifies any obvious amenities - or defects - that would have an impact on the value of the property.
Following the inspection, an appraiser employs two or three approaches when determining the value of real property:
a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.
Replacement Cost
This is where we analyze information on local construction costs, the cost of labor and other elements to determine how much it would cost to construct a property comparable to the one being appraised. This figure commonly sets the upper limit on what a property would sell for. It's also the least used method.
Paired Sales Analysis
Appraisers get to know the subdivisions in which they appraise.
We thoroughly understand the value of particular features to the homeowners of that area.
Then, the appraiser researches recent transactions in the vicinity and finds properties which are 'comparable' to the real estate at hand. Using knowledge of the value of certain items such as
remodeled rooms, types of flooring, energy efficient items, patios and porches, or additional storage space, we add or subtract from each comparable's sales price so that they more accurately match the features of subject property.
For example, if the comparable has a storm shelter and the subject does not, the appraiser may deduct the value of a storm shelter from the sales price of the comparable home.
However, 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.
In the end, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for.
This approach to value is commonly given the most importance when an appraisal is for a home sale.
Valuation Using the Income Approach
In the case of income producing properties - rental houses for example - the appraiser may use an additional method of valuing real estate.
In this case, the amount of revenue the property generates is factored in with other rents in the area for comparable properties to determine the current value.
Putting It All Together
Combining information from all applicable approaches, the appraiser is then ready to stipulate an estimated market value for the property at hand.
Note: While this amount is probably the most accurate indication of what a property would sell for in an open market, it may not be the final sales price.
Prices can always be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'.
Regardless, the appraised value is typically employed as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace.
At the end of the day: An appraiser from Accredited Appraisal Services / Home Values Tulsa will guarantee you get the most fair and balanced property value, so you can make profitable real estate decisions.
