Whether you plan to sell your house or need the information for taxes, you have to determine your property’s worth. Experts can do that for you through the valuation process. It’s a complex set of guidelines an appraiser uses, and there are different methods for various assets. As a homeowner, you’d want to focus on real estate valuation. The steps listed below are pretty standard for appraisers. What separates them from others is how well they execute each measure.
Research Before the Visit
An appraiser would first bring up and study your home’s data. That can include the square footage of your property and gross living area, the initial price you bought it, and other details. Next, they’ll compare this information to the nearby houses in your neighborhood. The amount of time that would take depends on various factors, such as how similar these homes are to yours. Finally, the appraiser will look at some sales that took place in your area for the past six months. These transactions could be ongoing or complete, and they’ll mainly be from the properties that are the closest in similarity to yours.
Collecting Information Onsite
This step is where the professional comes to your location and takes pictures of your home and the surrounding neighborhood, one of the main tasks people might remember when asked, “what is the valuation process?” It’s to get a good idea of your house’s curb appeal and the quality of the local area. Also, they’d measure the building’s exterior. Sizes do vary, even if the next house looks nearly identical to yours. Finally, an appraiser would need to take photos of the interior to understand your home’s condition better. They’ll be capturing every single room, and they might shoot each one at different angles.
Additional Neighborhood Research
At this point, the appraiser already took pictures of some surrounding homes. They’d also photograph any signs that depict the current sale price of houses that look close to yours. Then, like your property, the expert will pull up data for the neighborhood. Your area could have ratings on safety, zoning, and other details that will factor into the valuation. Finally, they’ll compare all of the sales information they’ve collected thus far to local market data. This method will help them further narrow down the results.
Start Recording Data
Some appraisers use software to help them keep track of all of the information they’ve obtained about each client’s property. It’s faster and convenient for both them and you. They can upload the photos on their program of choice. Depending on how the technology works, they can organize each picture and make comparisons much more efficiently. The professional could even find and upload the local plat map, though they can do all of these tasks manually if they prefer. They might ask you for this document.
The valuation process can yield completely different results for properties in an area because of how vast they can be. So even if your neighbor has a house that looks exactly like yours, you shouldn’t expect them to have the same results as you. As complex as the valuation process is, many consider it to be an art. Crafting the final report takes a lot of individual effort. Regardless of all that, the valuation process will still yield an opinionated conclusion. You might disagree with that estimate, so don’t hesitate to discuss the price further.
Gathering and Uploading Various Geographic Charts
The next item they’ll obtain is the survey map. It’s similar to the plat, but it also shows the property’s size after you’ve made improvements to it. For example, you might’ve gotten a porch installed at some point. But, of course, they won’t need a survey map if you’ve never gotten any new expansions. Next, they’ll upload the flood and location geographic charts. Respectively, these articles help whether your community is at risk of flooding and how conveniently close your home is to other places.
Your appraiser might use their software to make the final calculations on your home’s square footage. They can put the maps and any other visual information they have through a sketching program. Once they do that, they can validate the legal definition of the property. That depends on state laws, but an example would be the property’s unique lot, block, section, and subdivision. You might be getting this appraisal because you’re planning on moving and want to sell the house. There are many other purposes you should learn about when finding the answers to the question, “what is the valuation process?”
Writing Various Descriptions
Your appraiser now has plenty of information on your property for a complete analysis. It’s now that they can give an account on various details. One of these is the neighborhood. Their report will contain material on how well the surrounding houses look. No matter how visually appealing your home is, potential buyers might have less interest if the others look run-down. Other descriptions your appraiser will include in their report is the local market and your property.
Even if you didn’t invest in any additional square footage for your property, you still might have done some interior renovations. For example, you might have gotten a new bathtub or fully remodeled your kitchen. The professional would include these details in their report. They’d need this information for the sales comparison approach, which is when they compare your property value to the selling prices of other houses in your neighborhood. They account for extra bathrooms, square footage, and further extensions. The appraiser will also take away if your property has less.
Utilizing Different Approaches
Which method the professional uses depends mainly on the reason you’re requesting their services. They can look at your home’s previous sold prices, regardless of whether you were the first buyer. That’s necessary for any purpose, as it helps the appraiser make their final decision. Many can say the same for the cost approach. This process is more for additional information they can factor into the final valuation. However, the income approach is for those that own the property for investment intent.
Completed Report and Valuation
For the final step, the appraiser writes down one last description that details any changes they’ve made in their report. All of the information they’ve gathered and analyzed will all help them to make the estimation. They will base the actual cost on other numbers, including the cost and income approaches. Their official decision won’t be the average of these values; they’ll evaluate all of them and conclude there. Your appraiser doesn’t only prepare the report for you but any potential buyers of your property. They’ll schedule a time to meet with you and discuss the specifics in their final document. Once they’ve completed the valuation process, you can start taking in some potential buyers.
Your appraiser might not follow these exact steps. Some might have additional guidelines their company has created, or they might not use software for valuations. The main point of this process is to help you understand how it works and to have a general grasp of what to expect.
Contact Us To Learn More About The Valuation Process
Our experts will be more than happy to answer any questions you have about the valuation method. We have years of experience and helped many clients save time and money with our services. ExcelAppraise specializes in the home valuation process for various purposes.
If you’re interested in a free quote, call us at 1-801-822-2292.