Final Estimate of Value

Once the appraiser has applied the three approaches to the appraisal of your Virginia Beach real estate, he/she must decide which of them is the most reliable and most closely follows the actions of the market. For residential properties, the Sales Comparison Analysis is typically the most reliable. For commercial or industrial properties, all three techniques (or portions of one or more) may be reliable. The appraiser reconciles the various aspects of each technique into what he or she believes produces a credible and supportable opinion of value. The result is the Final Value Estimate, which, depending on the needs of the client, may be expressed as a single number or a range of value.

What If It’s Low?

If the appraisal of your Virginia Beach real estate comes in low, that doesn’t necessarily mean that you can’t complete the transaction. Your options to rectify the situation included the following:

1. You can make up the difference in cash.
2. The seller can lower the price.
3. The seller can carry a second mortgage for the difference.
4. You can order a second appraisal
5. You can supply a list of comparable sales and ask for a review of the appraisal.

What Does It Include?

Read the rest of this entry »

A vital step in the home buying process is a professional appraisal of the Virginia Beach real estate you wish to purchase. An appraisal is an objective analysis of the property’s market value and is required by lenders to make certain that the property is worth at least as much as the amount of the loan you are requesting. Your personal approval is accomplished early in the loan process, but final commitment usually hinges on a satisfactory appraisal, and the lender will study the completed report carefully before determining whether or not the piece of real estate qualifies to serve as security for your loan.

Appraisers are experienced and knowledgeable professionals whom are licensed by the state to estimate real estate values. They must follow rules set forth in the Uniform Standards of Professional Appraisal Practice (USPAP). Once the appraiser has determined the highest and best use of the Virginia Beach real estate, i.e. the most profitable utilization of the property, he/she will then go about estimating the home’s market value through the use of three basic approaches.

The Cost Approach

The Cost Approach: a set of procedures through which a value indication is derived by estimating the current cost to construct a reproduction of the existing structure, deducting the accrued depreciation and adding the estimated land value. The principle of substitution is the basis of the cost approach, in that no rational person will pay more for a property than the amount for which he can obtain, by purchase of a site and construction of a building, with undue delay, a property of equal desirability and utility. Appraisers typically make use of published cost figures when calculating the cost to construct a building. These sources of data are available online and in printed form. Land value is determined by a comparison of the subject site with other similar sites that have recently sold.

The Sales Comparison Analysis

Read the rest of this entry »