What goes into an appraisal?One's home purchase is the largest investment many of us might ever encounter. It doesn't matter if it's a main residence, a second vacation home or an investment, the purchase of real property is an involved transaction that requires multiple people working in concert to pull it all off.
The majority of the participants are quite familiar. The real estate agent is the most recognizable person in the exchange. Next, the lender provides the financial capital needed 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 transfer from the seller to the purchaser.
So what party makes sure the value of the property is in line with the purchase price? In comes the appraiser. We provide an unbiased opinion 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 Massachusetts licensed appraiser from Vaccari & Associates, Inc. will ensure you as an interested party are informed.
Appraisals begin with the home inspectionOur first task at Vaccari & Associates, Inc. is to inspect the property to ascertain its true status. We must actually see features, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they really exist and are in the condition a typical person would expect them to be. The inspection often includes a sketch of the floor plan, ensuring the square footage is proper and conveying the layout of the property. Most importantly, the appraiser identifies any obvious amenities - or defects - that would affect the value of the property.
Following the inspection, an appraiser employs two or three approaches when determining the value of real property: paired sales analysis and, in the case of a rental property, an income approach.
Cost ApproachHere, we use information on local construction costs, labor rates and other factors to derive how much it would cost to build a property similar to the one being appraised. This figure usually sets the maximum on what a property would sell for. The cost approach is also the least used method.
Sales ComparisonAppraisers become very familiar with the communities in which they appraise. We thoroughly understand the value of particular features to the people of that area. Then, the appraiser researches recent transactions in close proximity to the subject and finds properties which are 'comparable' to the subject in question. Using knowledge of the value of certain items such as upgraded appliances, additional bathrooms, an additional living area, quality of construction, lot size, we adjust the comparable properties so that they are more accurately in line with the features of subject.
Valuation Using the Income ApproachA third way of valuing real estate is sometimes used when an area has a measurable number of rental properties. In this case, the amount of revenue the property generates is factored in with income produced by nearby properties to derive the current value.
ReconciliationExamining the data from all approaches, the appraiser is then ready to put down an estimated market value for the subject property. Note: While the appraised value is probably the most reliable indication of what a property would sell for in an open market, it may not be the final sales price. Depending on the specific situations of the buyer or seller, their level of urgency or a buyer's desire for that exact property, the closing price of a home can always be driven up or down. But the appraised value is often employed as a guideline for lenders who don't want to loan a buyer more money than they could get back in case they had to sell the property again. The bottom line is: An appraiser from Vaccari & Associates, Inc. will guarantee you discover the most fair and balanced property value, so you can make wise real estate decisions.