In one of my earlier blog notes I talked about getting your property(ies) appraisal ready. I also wanted to discuss the types of approaches used to make up a complete appraisal. Real estate comps will be used by the appraiser to complete a report on your home to determine it’s value. In any situation where you’re using real estate as security for a loan, a lender will require a certified appraisal to make sure that the property will sell for at least the amount of money it’s lending. Likewise, an appraisal is an accurate way to determine the market value of your home. Using your InvestorCompsOnline account to have comparables on hand will give you an idea of what the property should appraise for.
Generally an appraiser will use a combination of approaches to accurately determine the current value of your home.The Market Approach, is one method whereby an appraiser will compare recently sold, similar properties and make adjustments between the subject properties and it’s comparables.The Cost Approach is a method where the appraiser will determine the cost to re-build the property in question. Lastly, the Income Approach is a method that relates to income-producing property. It is based on the theory that part of a home’s value is the present worth of the income stream which the property is capable of producing when developed to it’s highest and best use.
Generally, an appraiser will use a combination of results from all three of these methods to complete your home’s appraisal. When you are in the final stages of selecting your deals, use your InvestorCompsOnline account to review the real estate comps in the area and maybe even consider hiring an appraiser to get a better look into the current worth of your property.