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An appraisal is an estimate of Real Estate property -Home, Condo, Land, Business, Lifestyle Property or other- made by an state certified appraiser not involved in any way with the real estate transaction.
Is normally part of a loan application in order to get approval from the lender. Two basic reasons why Lenders order an Appraisal:
1, Have a set idea of how much the borrower realistically needs.
2, See if the property value is enough collateral for the loan amount.
But, can be other reasons too.
Lenders, banks hire an appraiser to examine the physical characteristics of the property to determine the value based upon three basic approaches.
1, Cost Approach to value is what it would cost to replace or reproduce the improvements or defects within the property.
2, Income approach to value is of primary importance. This approach provides an objective estimate of what an investor would pay based upon the net income the property produces.
3, Comparison Approach is an estimate made upon comparison of other similar properties in the area, also known as “comparables”. (Most common approach for Residential Real Estate)
The length of the inspection itself, depend upon size and uniqueness of the property
During this process the appraiser takes many things into consideration in the process of evaluating your property. Measures the exterior to determine square footage, will then take notes on interior features such as room layout, number of bedrooms, baths, improvements if any and so on.
Make judgments of the general condition, location, appeal and layout of your home.
Examines the neighborhood or area to find similar properties that have sold within the last six months or year. It would be important to inform the appraiser of any physical damage or leakage that isn’t evident.
Details about the subject property, along with side-by-side comparisons of -ideally- three similar properties.
Overall real estate market in the area, Average sales time for similar properties in the area.
Poor access to the property are harmful to the appraisals outcome. Take note about flawed physical characteristics, such as a crumbling foundation.
The value of the property will be decided through a CMA (Comparative Market Analysis). Through a CMA, whether buying or selling, would be a more efficient way to see if a property is over and under priced. Do not confuse a CMA with an appraisal. Appraisal reports are much more extensive and detailed and is the only report a bank will consider when deciding whether or not to lend money. Here are some evaluations you will see on an appraisal report the value of your home that the appraiser estimates is not the final value of your house, condo or property. However, the final value of the property is sometimes re-negotiated following the result of the Appraiser’s report
Our Team, at Finest Orlando Homes will support you during the whole Real Estate Transaction Process, Appraisal, inspections, negotiations included.