Appraising in the real estate field is the act of valuing a real estate property by the estimate of a qualified person. This assists in predicting at how much a property would sell at the current market prices. This greatly helps the person who is possession of the property. The individual who carries out the duty of appraising the property is known as the appraiser. They get their license from the state after they have qualified to be given the license. The property in consideration for appraisal is called the subject property.
The appraiser must not be tied to the people who are transacting the property in any way. They should not be a person who will be benefiting financially as the result of the transaction that is going to occur. To lenders, an appraisal guides the lender on how to lend money to the owner of a property. An appraisal is used as a collateral security to help in obtaining money from those who lend money to those who lend moneys. Lenders are guided by the amount stated in the appraisal to know the amount that they will lend to the borrower.
In the appraisal, there are details about the subject property and also comparisons other similar properties currently in the market. It also contains an analysis of the prevailing real estate market. The appraisal document also gives details about the area which the subject property is situated. An example of these details could include stating whether the area is a developing or already developed and the kind of the amenities neighboring the property. The appraisal states also the time the property would stay in the market when it comes to the time of selling it.
There are two major approaches of carrying out appraisal which include sales comparison and cost approach. In sales comparison, the appraiser is guided by comparing the costs at which other similar properties have sold at in the neighboring areas. The similar properties that the subject property is compared with are called the comparables. For the cost approach method; new properties are the most suitable.
The reason for this is that all costs involved in putting up the structure are known at the time when the property is newly constructed. Hence, the appraiser values the property at the amount it costed to construct the whole structure.
When one gets a law appraisal, they should not panic because they can follow certain steps that would help them improve their appraisal.
Also, some problems may be identified with the subject property but this too can be well taken care of. Therefore the appraisal should not cause panic to the owner in any way whatsoever.