The residential appraiser is taught how to measure a home, examine it for positive and negative features, take photos, study the neighborhood, seek out comparable sales and listings, and create a report that solves a valuation problem. All of these things primarily involve the technical side of the work. But what about the bigger picture of Residential Real Estate Appraisal Philadelphia PA? What appraisers do has a profound effect upon our local markets, communities, and the nation as a whole.
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.
After visiting the property, the appraiser will determine the fair value of the property by considering such things as location, comparable home sales, and previous appraisals. All of the observations and research will be compiled in a detailed report, which not only states the value of the residential property, but the precise reasoning and technique of how the estimate was derived.
As for Income Approach, the appraiser checks the ability for the property to earn an income. For example, the home owner added a carport. Many tenants are willing to pay extra for the use of a carport. Let us say the home owner transform the carport into another room with kitchen and bathroom. The home owner can rent out the new room. The recent addition to the property increases the appraise value.
Being listed in MLS, if that home does end up closing at the inflated price, it will show up as a closed sale in MLS. When brokers and agents conduct a competitive market analysis of another similar home they want to list, the inflated price of the property you over appraised will enter into their research and influence the list price the agent recommends to their seller.
The inflated sale can cause a cascade effect. Now every home is overpriced because of one inflated sale. The result is buyers faced with less affordability and/or sellers attempting to sell their homes at asking prices that are not realistic. Buyers, sellers, agents and even lenders and title companies out there can suffer as a result of this. All because you did not do your duty and failed to consider the bigger picture.
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.
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.
After visiting the property, the appraiser will determine the fair value of the property by considering such things as location, comparable home sales, and previous appraisals. All of the observations and research will be compiled in a detailed report, which not only states the value of the residential property, but the precise reasoning and technique of how the estimate was derived.
As for Income Approach, the appraiser checks the ability for the property to earn an income. For example, the home owner added a carport. Many tenants are willing to pay extra for the use of a carport. Let us say the home owner transform the carport into another room with kitchen and bathroom. The home owner can rent out the new room. The recent addition to the property increases the appraise value.
Being listed in MLS, if that home does end up closing at the inflated price, it will show up as a closed sale in MLS. When brokers and agents conduct a competitive market analysis of another similar home they want to list, the inflated price of the property you over appraised will enter into their research and influence the list price the agent recommends to their seller.
The inflated sale can cause a cascade effect. Now every home is overpriced because of one inflated sale. The result is buyers faced with less affordability and/or sellers attempting to sell their homes at asking prices that are not realistic. Buyers, sellers, agents and even lenders and title companies out there can suffer as a result of this. All because you did not do your duty and failed to consider the bigger picture.
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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