A home purchase is undoubtedly the largest single investment most people will ever make. The purchase itself usually requires multiple parties ie a buyer, a seller, a realtor, attorneys to facilitate and help complete the entire process. But just who makes sure the value of the property is in line with the amount being paid?
That’s where the appraiser comes in. An appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions.
A real estate appraisal is a comprehensive evaluation to ascertain the fair market value of a home/property and is performed by an independent licensed appraiser. Whether you’re a seller or a buyer, you’re definitely going to want to make sure that your getting fair market value.
Real estate appraisals follow strict licensing and industry guidelines and are most often used by lenders when issuing mortgages/loans for re-financing or buying/selling a home.
Bahamas Realty’s appraisals department which was established well over three decades ago by Robin Brownrigg, President and Senior Valuer in the firm, has a team of fully qualified appraisers and is recognised as one of the foremost appraisal units in the Bahamas. To find out more Read Here
So what goes into an appraisal?
An appraisal can include recent sales information for similar properties, the current condition of the property, age of the property, the location of the property, curb appeal and current real estate market.
It all starts with the inspection.
An appraiser has to inspect the property to assess its features ie location, square footage, number of bedrooms, bathrooms, improvements, defects etc. During the inspection, the appraiser considers both the interior and exterior of a home to get the best value of the house. Exterior-wise, the appraiser will consider things like the total land area or acreage of your property, the condition of the property and interior wise, number of rooms and built-in appliance upgrades will be taken into account.
Once the site has been inspected, an appraiser uses two or three approaches to determine the value of real property: a cost approach, a sales comparison and, in the case of a rental property, an income approach.
With the cost approach, the appraiser uses information on local building costs for example 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.
With the sales comparison approach, appraisers get to know the neighborhoods in which they work and will use this information to determine which attributes of a property will make a difference in the value. The appraiser then researches recent sales in the area and finds comparable properties.
In the case of income producing properties ie a condo, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.
It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. There are always other factors such as seller motivation, urgency that may adjust the final price up or down. The appraised value is often used as a guideline for lenders.