Appraised Value
What is Appraised Value?
Appraised value is the fair market value of a piece of property as determined by a licensed and qualified appraiser. Through the use of accepted formula, research and inspection of the property, the appraiser will estimate a fair market value of the property.
Appraisal is commonly used in the real estate industry to obtain a value of the property. The appraised value is used for a number of purposes: the local taxing authority will use an appraisal to determine your real estate tax liability, a potential buyer will use it to make an offer, a realtor will use it as a gauge to determine how much to price your property, and a lender will use it to determine how much money may be loaned to you.
How the appraisal is conducted
An appraiser is a licensed professional, trained and educated in determining the value of real estate. The most common method is the comparable sales approach. In this method, the appraiser will view the property through a physical inspection. The appraiser will note the physical condition of the property, its age the number of rooms, style, amenities and quality of building materials used.
The appraiser will then research the immediate neighborhood to determine whether recent sales were conducted, obtain the purchase price for the recent sales, and compare the properties sold with the property being appraised. The appraiser will then add or deduct value based on the differences between the appraised property and the properties recently sold.
In another method, not frequently used for residential property, the appraiser will determine whether the property is residential, commercial, etc. The appraiser will consider the cost to replace or “rebuild” the property through new construction, and deduct the depreciation of the property based upon its age.
At First Foundation, we understand that appraisals are often necessary for the mortgage process and are used frequently by lenders in determining whether a mortgage can be issued, and if so, for how much. We take care of ordering the appraisals from the approved list of appraisers provided by our lenders and liaison with the appraisers to ensure they are completed properly and in a timely manner.
Related Terms:
Fair Market Value, Real Estate Appraisal, Closing Costs, Loan to Value Ratio (LTV)
If you are interested in learning more about appraised value, please feel free to contact us today!