Residential property appraisal reports can be quite complex documents full of extensive market data and documented procedures for estimating value. For the novice, as well as the seasoned real estate professional, the reports can be difficult to understand, and most users simply look for the statement of value. This article helps takes you through insights on making sense of the reports by residential real estate appraisal Philadelphia PA.
On the process of applying for mortgage, the lender requires the selling price to meet or exceed the appraise value. The appraise value protects the lender in case of default on mortgage payments. That is why an appraiser is usually a third party with no financial connection to the lender, seller, or buyer.
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.
Suppose you find that there seems to be no real reason for this; that the home does not have any physical or location characteristics that justify such a price. Your duty in this situation is clear, but you know that your lending client will fire you if you appraise this property at market value and spoil their deal. Hopefully your duties under USPAP will be enough to convince you to do the right thing. But if you still are not sure, think about some things that will happen if you do the wrong thing.
There are a variety of uses of an appraisal Value. The appraise value plays an important role on mortgage application, mortgage refinance, divorce, estate settlement, employee relocation, and buyer offer. As you are aware on mortgage application and refinance, the home selling price must meet or exceed the appraise value. When the time comes to partition the ownership of the residential property, the appraise value becomes important once again. For example, the divorce, or estate settlement are good examples.
If the comparables have superior characteristics in relation to the subject property, then a downward adjustment is undertaken to the valuation of the subject property. On the other hand, if the comparables have inferior qualities compared to the subject property, an upward adjustment is done to the valuation of the subject property. Utilizing all of the market data, the appraiser will determine a final valuation for the subject property.
The advent of HVCC and other measures has done a lot to mitigate the pressure that appraisers face from their lending clients. This is a good thing. Appraisers must be allowed to be independent and government now seems to understand this well and is willing to act upon it. But there still exist those occasional appraisers that are unable or unwilling to consider the consequences of their actions beyond themselves. There is little that we can do about those appraisers except to catch and possibly punish them.
On the process of applying for mortgage, the lender requires the selling price to meet or exceed the appraise value. The appraise value protects the lender in case of default on mortgage payments. That is why an appraiser is usually a third party with no financial connection to the lender, seller, or buyer.
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.
Suppose you find that there seems to be no real reason for this; that the home does not have any physical or location characteristics that justify such a price. Your duty in this situation is clear, but you know that your lending client will fire you if you appraise this property at market value and spoil their deal. Hopefully your duties under USPAP will be enough to convince you to do the right thing. But if you still are not sure, think about some things that will happen if you do the wrong thing.
There are a variety of uses of an appraisal Value. The appraise value plays an important role on mortgage application, mortgage refinance, divorce, estate settlement, employee relocation, and buyer offer. As you are aware on mortgage application and refinance, the home selling price must meet or exceed the appraise value. When the time comes to partition the ownership of the residential property, the appraise value becomes important once again. For example, the divorce, or estate settlement are good examples.
If the comparables have superior characteristics in relation to the subject property, then a downward adjustment is undertaken to the valuation of the subject property. On the other hand, if the comparables have inferior qualities compared to the subject property, an upward adjustment is done to the valuation of the subject property. Utilizing all of the market data, the appraiser will determine a final valuation for the subject property.
The advent of HVCC and other measures has done a lot to mitigate the pressure that appraisers face from their lending clients. This is a good thing. Appraisers must be allowed to be independent and government now seems to understand this well and is willing to act upon it. But there still exist those occasional appraisers that are unable or unwilling to consider the consequences of their actions beyond themselves. There is little that we can do about those appraisers except to catch and possibly punish them.
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