| |
| Understanding
the Appraiser |
|
Real Estate Opportunity |
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You
find the ideal piece of property to purchase to begin your investment
career, negotiate with the seller, and set a purchase price. How do you
ensure you don’t pay too much for this property? Hire a certified real
estate appraiser.
Lucky for you, all federal transactions of real estate require an
appraisal. The purpose of the real estate appraisal is to determine
market value.
Truthfully, the bank wants to ensure their money is
secured in the value of the property they are lending against. In the
unfortunate situation, you are not able to repay the loan, the bank
wants to ensure they can sell the property and recoup their investment. |
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The appraiser is there to protect the bank, buyer and
seller by being a disinterested third party that renders their opinion
of value.
Contrary to popular belief, it is not the appraiser’s job
to hit a predetermined sales, purchase, or refinance amount. The
appraiser is intended to render their opinion of value based on the
valuation process and under no influence or duress.
The valuation process
consists of researching the property to be appraised, physically
inspecting the property, and formulating an argument and support that
would justify an opinion of value.
In researching the
property, the appraiser will search for active, pending, and closed
sales of the property, the zoning,
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tax
records, neighborhood boundaries, comparative market analysis, legal
description, and more. The
physical inspection occurs when the appraiser visits the property, measures,
takes pictures, and details the property’s condition by actually inspecting
the property from top to bottom, front to back. An opinion of value is
formulated and defended when the appraiser selects three or more comparable
properties that best support a value conclusion.
It is
paramount to remember an appraisal is an opinion of value rendered by a
competent professional and supported by market data and closed sales. The
appraisal value is not an absolute and the true value can only be determined
by the buying public. The appraiser is a skilled professional that
interprets market data to make a value conclusion. You should know, if five
appraisers, appraised the same property, you may end up with five different
values. The key is for your appraiser to have sound logic and justifiable
sales to represent a value.
At the
end of the day, appraisals are a necessary and critical part of the real
estate industry. Further, understand this profession or having a
knowledgably appraiser on your team, would be tremendous. There are many
more aspects of the appraisal industry to cover and we will do so in the
future.
*****************************************************************************
Freddie E. Taylor, MBA is a Certified Residential Appraiser with Masterpiece
Enterprises Appraisal Division, specializing in market value, future value,
and FHA appraisals in Illinois and Indiana. For more information, Freddie
can be reached at 708-991-2861 or shoot him an email at
contact@FreddieTaylor.com. |
