|
How Does the Appraiser Arrive at a Value?
STEP ONE: RESEARCH THE SUBJECT PROPERTY.
The appraiser completes a physical
inspection
of the property. He(she) inspects the building interior, building exterior,
and the site; taking note of quality of materials and workmanship, finish
details, and other factors affecting the property's value. The appraiser
conducts research to compile a sales and listing history of the property, and
background on repairs and improvements to the property. This might involve
interviews with the owner and real estate sales agents. The appraiser researches
real estate assessment information to confirm site size, past ownership history,
and additional property information.
STEP TWO: RESEARCH LOCAL REAL ESTATE SALES
The appraiser locates 3 to 6 other,
comparable, properties which have sold and closed during the
preceding 6 to 8 months. These properties must be similarly located, and must be
similar to the subject for design, age and condition. The appraiser researches
the comparable properties for details of quality, condition, and sale in order
to ascertain any elements affecting the sales price. This process may involve
interviews with the seller, the purchaser, or the real estate agents involved.
The appraiser researches real estate assessment information to compile
additional physical information and ownership history for each comparable sale.
STEP THREE: ANALYSIS
The appraiser judges which comparable properties will be used for
the comparable analysis and which are not suitable for comparable analysis. The
appraiser breaks down the subject property and each comparable property into ten
or more components for comparison. Each component of each comparable property is
compared to the corresponding component of the subject property. The appraiser
makes a monetary adjustment to account for differences in each component. The
result of this comparison results in an indicated value
for the subject property.
STEP FOUR: REPORTING THE VALUE
The appraiser is legally required to ascertain the
needs of his client and then determine the appropriate value reporting method.
The appraiser may provide a:
Verbal Valuation: A written
report is not provided; however, the appraiser maintains a complete file of
the analysis.
Written Report: Letter
format, or Summary Report; in letter form or on one of several types of
mortgage forms.
Full Narrative Report: A
very detailed report including all aspects of the appraisal process.
Whenever an appraiser provides an opinion of value, he is legally
required to maintain a file containing all details of the appraisal process for
a period of five years.
|
