Real estate appraising is the process of estimating the value of a real estate property which is done by an authorized individual. This helps in establishing the price a property would fetch it was offered in the free market economy. It of great importance to the person who possess this property. An appraiser is the person who apprises the property. They get their license from the state after they have qualified to be given the license. The property in consideration for appraisal is called the subject property.
The person appraising a property should be always a neutral person. They must be having no financial benefits from the property or any other kind of ties. To lenders, an appraisal guides the lender on how to lend money to the owner of a property. An appraisal is used as a collateral security to help in obtaining money from those who lend money to those who lend moneys. The amount of money that a money lender offers to the borrower is determined by the amount stated in the appraisal as the value of the property.
In the appraisal, there are details about the subject property and also comparisons other similar properties currently in the market. It also provides information about the real estate market in the area surrounding the subject property. The appraisal also states the condition of the area where this property is located. An example of these details could include stating whether the area is a developing or already developed and the kind of the amenities neighboring the property. The appraisal states also the time the property would stay in the market when it comes to the time of selling it.
The two most popular methods used in property appraisal are sales comparison approach method and cost approach method. In sales comparison, the appraiser values the property according to the amount other similar properties have sold at in the surrounding. These other similar properties are referred to as comparables. For the cost approach method; new properties are the most suitable.
This is mostly due to the fact that the cost of the subject property is known when the property is new. Here, the estimated value of the subject property becomes the amount at which it costs to build the whole the property from the beginning to the finishing.
Sometimes the appraisal might be low but the one should not worry since they are given certain procedures to follow in order to step up the appraisal.
If there are some problematic situations discovered during the time of appraisal, they can be easily fixed also. Therefore the appraisal should not cause panic to the owner in any way whatsoever.