Property Inspection
A real estate appraisal all starts with the inspection. An
appraiser inspects the property to verify the status of that
property and actually see the features, such as the number
of bedrooms, bathrooms, the location, etc. The purpose is to
ensure that features actually exist and are in the condition
a reasonable buyer would expect them to be. The inspection
often includes a sketch of the property, ensuring the proper
square footage and conveying the layout of the property.
Cost Approach
The cost approach is the easiest to understand. The
appraiser uses information on local building costs, labor
rates and other factors to determine how much it would cost
to construct a property similar to the one being appraised.
This value often sets the upper limit on what a property
would sell for. Why would you pay more for an existing
property if you could spend less and build a brand new home
instead? While there may be mitigating factors, such as
location and amenities, these are usually not reflected in
the cost approach.
Sales Comparison
Another approach is the sales comparison. Combining
information from recent sales in the vicinity and specific
property features, the appraiser finds properties which are
''comparable'' to the subject being appraised. The sales
prices of these properties are used as a basis to begin the
sales comparison approach. Adjustments are made to more
accurately portray the subject property.
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