Like most people, you have probably looked at homes for sale, even if you weren’t in the market to buy. You realize that homes have assigned values, which seemingly come out of nowhere. Have you wondered what goes into evaluating the fair market value of a property? NoVaStar Appraisals, Inc. is happy to run through a basic explanation of what determines the fair market value of a home, as it is a huge part of real estate appraisals. Please note, there is a long process that a licensed appraiser goes through, including a thorough inspection of the property to come to accurate, fair market value. The following information is only to guide you through the basic methods appraisers may use during your appraisal.
Three Methods of Attaching Value to Real Estate Appraisals
The most common way to assign a value to a piece of real estate is through the “sales comparison approach” which takes into account the current real estate market and previous sales of similar properties. There is also the “cost approach.” This process is done by analyzing what the cost would be to replicate a home in the particular location. This is also a common approach, used in conjunction with the sales comparison approach even though more weight is usually placed on the sales comparison approach. The last method is the “income-based method,” which is only used if there are rental properties in the immediate area that make sense to take them into account.
While there are three primary methods an appraiser, like one at NoVaStar Appraisals Inc., would use to evaluate the fair market value of a home, there are other factors that may further alter the final value. This includes depreciation of the property due to the age and life of the home. This means they evaluate the condition of the house, the life of the materials used to build it, and many other elements to come to a depreciation value that they would take into account when calculating the final fair market value of the home.
Talk to Your Real Estate Appraisal Expert
Do you have additional questions regarding real estate appraisals? The best way to get an accurate idea of the fair market value of your home is to talk to a licensed real estate appraisal professional. NoVaStar Appraisals Inc. urges you to consider researching the credentials of your appraiser to ensure you are getting the most accurate information backed by an experienced appraiser.