Thursday, January 19, 2017

The Bigger Picture Of Residential Real Estate Appraisal Philadelphia PA

By Janet Patterson

Appraiser puts a price to the fair market value (rights of ownership). With the current location, amenities, and condition of the property, the appraisers write a detailed report. The detailed report states the comparison of local homes, imperfection of property, type of home, and danger to property. By the end of appraisal, the appraiser knows more about the property than the home owner. Read along to get acquainted more about Residential Real Estate Appraisal Philadelphia PA.

You can see it in everyday practice. Is it just a coincidence that a size adjustment of say $30 per square foot seems to be just right in equating two or three comparables? Is that only what the market seems willing to pay (or subtract) for the difference in size, or is there something else at play here?

Common Appraisal Approach. The three approaches to effectively appraise a property are Sales Comparison, Cost, and Income Approach. In Sales Comparison Approach, the appraiser finds comparables or comps. The comparables or comps are another property in the same vicinity or location. There are no two properties exactly the same. So, the appraiser takes notes of the similarities and characteristics.

In Cost Approach, the appraisers check how much to build the residential real estate property. This approach plays a major role to new homes in which you can easily calculate the cost to build a new home. For many areas with booming real estate, the shortage of skilled labor drives the cost to build a new home high.

Suppose you find that there seems to be no real reason for this; that the home does not have any physical or location characteristics that justify such a price. Your duty in this situation is clear, but you know that your lending client will fire you if you appraise this property at market value and spoil their deal. Hopefully your duties under USPAP will be enough to convince you to do the right thing. But if you still are not sure, think about some things that will happen if you do the wrong thing.

This approach is based on recent sales prices of comparable properties. Information is collected on recent sales of properties similar to the subject property. The appraiser will search for similar properties; however, comparable properties will not be identical to the subject property, so there will be a valuation adjustment.

An employee may opt to take another position in their company. This happens to promotion. The management positions are usually at the head office. So, the company helps an employee to relocate. The employee has no idea about the fair market value of the new location. With the appraise value available, he makes a correct offer.

In conclusion, the appraiser often acts as a traffic cop. Although the presence of a cop on the road will cause most sensible drivers to pay greater attention to the rules of the road, the cop must be will to act when necessary. The same basically holds true for valuations. Is the valuation reasonable? Does it reflect normal market variations? Like the traffic cop, the appraiser has a real influence over the lives and fortunes of others.

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