Appraisal
Basics:
An appraisal of real estate is
the valuation of the rights of ownership. The appraiser must
define the rights he intends to appraise. The appraiser does not
create value, the appraiser interprets the market to arrive at a
value estimate. As the appraiser compiles data pertinent to a
report, consideration must be given to the site and amenities as
well as the physical condition of the property. An appraiser may
spend only a short time inspecting the property, however, this is
only the beginning. Considerable research and collection of
general and specific data must be accomplished before the
appraiser can arrive at a final opinion of value.
Due to the many types of value, such
as Fair Market Value, Insurance Value, Tax Value and Value In
Use, the need to precisely define the purpose of the appraisal is
essential.
Appraisal
Methods:
An appraisal is an opinion of value
or the act or process of estimating value. This opinion or
estimate is derived by using three common approaches, all derived
from the market. They are:
1. Cost Approach to
value is what it would cost to replace or reproduce the
improvements as of the date of the appraisal, less the Physical
Deterioration, the Functional Obsolescence and the Economic
Obsolescence. The remainder is added to the Land Value.
2. Comparison
Approach to value makes use of other "bench
mark" properties of similar size, quality and location that
have been recently sold. A comparison is made to the subject
property.
3. Income Approach to
value is of primary importance in ascertaining the value
of income producing properties and has little weight in
residential type properties. This approach provides an objective
estimate of what a prudent investor would pay based upon the net
income the property produces. Then, after thorough analysis of
all general and specific data gathered from the market, a final
estimate or opinion of value is correlated.
If you have questions just ask! You
may contact Virginia Mortgage Services for your home appraisal
questions by email, phone or by appointment
in our office.
Start now by filling out our online loan application! Call us
at
804.379.3302,
Monday through Friday from 9 a.m. to 5 p.m. Eastern time.
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