What is an appraisal?
A home purchase
the most serious
It doesn't matter if it's
where you raise your family,
an additional vacation home or
one of many rentals, the purchase of real property is
a complex financial transaction that requires multiple parties to make it all happen.
||To learn more about appraising, click here to see a short video or call us today to talk about your specific property.
Practically all the participants are quite familiar.
The real estate agent is the most known face in the exchange.
Next, the mortgage company provides the financial capital needed to fund the transaction.
Ensuring all areas of the transaction are completed and that the title is clear to pass from the seller to the purchaser is the title company.
So who's responsible for making sure the property is consistent with the amount being paid?
In comes the appraiser. We provide an unbiased estimate of what a buyer could expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional New Mexico licensed appraiser from Mike Archuleta will ensure you as an interested party are informed.
Appraisals begin with the inspection
Our first responsibility at Mike Archuleta is to inspect the property to determine its true status.
We must physically see features, such as the number of bedrooms and bathrooms, the location, living areas, etc., to ensure they really exist and are in the shape a reasonable 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 features - or defects - that would affect the value of the property.
Back at the office, an appraiser employs two or three approaches when determining the value of the property:
paired sales analysis and, in the case of a rental property, an income approach.
Here, we analyze information on local construction costs, labor rates and other elements to calculate 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. The cost approach is also the least used method.
Appraisers can tell you a lot about the neighborhoods in which they appraise.
We innately understand the value of particular features to the homeowners of that area.
Then, the appraiser looks up recent transactions in the neighborhood and finds properties which are 'comparable' to the real estate 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 add or subtract from each comparable's sales price so that they are more accurately in line with the features of subject.
Once all necessary adjustments have been made, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for.
This approach to value is typically given the most importance when an appraisal is for a real estate exchange.
Say, for example, the comparable has an irrigation system and the subject does not, the appraiser may deduct the value of an irrigation system from the sales price of the comparable home.
However, if the subject has an extra half-bathroom and the comparable does not, the appraiser might add an amount to the comparable property.
Valuation Using the Income Approach
In the case of income producing properties - rental houses for example - the appraiser may use an additional method of valuing a property.
In this situation, the amount of income the real estate produces is factored in with other rents in the area for comparable properties to give an indicator of the current value.
Coming Up With the Final Value
Combining information from all 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 reliable indication of what a house is worth, it probably will not be the price at which the property closes.
There are always mitigating factors such as seller motivation, urgency or 'bidding wars' that may adjust the final price 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 the property is actually worth.
At the end of the day: An appraiser from Mike Archuleta will help you attain the most fair and balanced property value, so you can make wise real estate decisions.
PO Box 1466 Ranchos De Taos, NM 87557-1466Phone: Fax:
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