An Overview of the Appraisal ProcessOne's home purchase is the most important transaction most may ever encounter. It doesn't matter if it's a main residence, a second vacation property or an investment, purchasing real property is an involved transaction that requires multiple parties to see it through.
Practically all the people participating are quite familiar. The real estate agent is the most familiar face in the transaction. Then, the bank provides the financial capital necessary to bankroll the deal. The title company sees to it that all details of the exchange are completed and that the title is clear to pass to the buyer from the seller.
So who makes sure the value of the property is consistent with the amount being paid? This is where the appraiser comes in. We provide an unbiased estimate of what a buyer might expect to pay - or a seller receive - for a parcel of real estate, where both buyer and seller are informed parties. A professional Georgia licensed appraiser from Perimeter Appraisal Services, LLC will ensure you as an interested party are informed.
Appraisals begin with the inspectionOur first duty at Perimeter Appraisal Services, LLC is to inspect the property to ascertain its true status. We must actually view features, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they really exist and are in the condition a reasonable person would expect them to be. The inspection often includes a sketch of the floor plan, ensuring the square footage is accurate and conveying the layout of the property. Most importantly, the appraiser identifies any obvious features - or defects - that would affect the value of the house.
Back at the office, an appraiser employs two or three approaches when determining the value of real property: sales comparison and, in the case of a rental property, an income approach.
Cost ApproachThis is where the appraiser pulls information on local building costs, labor rates and other elements to figure out how much it would cost to replace the property being appraised. This value commonly sets the maximum on what a property would sell for. It's also the least used predictor of value.
Sales ComparisonAppraisers are intimately familiar with the communities in which they work. We thoroughly understand the value of certain features to the people of that area. Then, the appraiser researches recent sales in close proximity to the subject and finds properties which are 'comparable' to the subject being appraised. Using knowledge of the value of certain items such as square footage, additional bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we add or subtract from each comparable's sales price so that they are more accurately in line with the features of subject.
Valuation Using the Income ApproachIn the case of income producing properties - rental houses for example - we may use a third method of valuing a property. In this scenario, the amount of revenue the real estate produces is factored in with other rents in the area for comparable properties to give an indicator of the current value.
Putting It All TogetherCombining information from all applicable approaches, the appraiser is then ready to document an estimated market value for the property in question. It is important to note that while this amount is probably the most accurate indication of what a house would sell for in an open market, it may not be the price at which the property closes. It's not uncommon for prices to be driven up or down by extenuating circumstances like the motivation or urgency of a seller or 'bidding wars'. But the appraised value is often 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. Here's what it all boils down to: An appraiser from Perimeter Appraisal Services, LLC will help you discover the most fair and balanced property value, so you can make the most informed real estate decisions.