Purchasing a house
can be
the most important
transaction
some
will
ever
consider.
It doesn't matter if it's
where you raise your family,
a seasonal vacation property or
one of many rentals, purchasing real property is
a complex financial transaction that requires multiple people working in concert to see it through.
To learn more about appraising, click here to see a short video or call us today to talk about your specific property.
You're probably familiar with the parties taking part in the transaction.
The most recognizable entity in the transaction is the real estate agent.
Next, the mortgage company provides the money required to bankroll the exchange.
Ensuring all aspects of the transaction are completed and that a clear title transfers from the seller to the buyer is the title company.
So who's responsible for making sure the value of the real estate is in line with the purchase price?
This is where you meet the appraiser. We provide an unbiased opinion of what a buyer might expect to pay - or a seller receive - for a property, where both buyer and seller are informed parties. A professional California licensed appraiser from Jonathan Izumi Appraisal will ensure you as an interested party are informed.
The inspection is where an appraisal begins
To ascertain the true status of the property, it's our responsibility to first perform a thorough inspection.
We must physically view features, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they truly exist and are in the shape a typical buyer would expect them to be.
To make sure the stated square footage has not been misrepresented and convey the layout of the house, the inspection often requires creating a sketch of the floor plan.
Most importantly, the appraiser looks for any obvious features - or defects - that would affect the value of the house.
Back at the office, we use two or three approaches when determining the value of the property:
paired sales analysis and, in the case of a rental property, an income approach.
Cost Approach
Here, the appraiser pulls information on local building costs, labor rates and other elements to figure out how much it would cost to replace the property being appraised. This figure often sets the upper limit on what a property would sell for. It's also the least used method.
Sales Comparison
Appraisers are intimately familiar with the subdivisions in which they appraise.
We innately understand the value of specific features to the residents of that area.
Then, the appraiser researches recent sales in the area and finds properties which are 'comparable' to the subject in question. By assigning a dollar value to certain items such as
fireplaces, room layout, appliance upgrades, additional bathrooms or bedrooms, or quality of construction, we add or subtract from each comparable's sales price so that they more accurately portray the features of subject property.
For example, if the comparable property has a fireplace and the subject does not, the appraiser may subtract the value of a fireplace from the sales price of the comparable.
In the case where the subject has something such as an extra half bath that a comparable doesn't have, the appraiser might add the value of that bath to the comparable property.
When it comes to putting a value on features of homes in Monterey Park and Los Angeles, Jonathan Izumi Appraisal is second to none.
This approach to value is usually given the most consideration when an appraisal is for a home purchase.
Valuation Using the Income Approach
A third method of valuing a property is sometimes used when a neighborhood has a reasonable number of renter occupied properties.
In this scenario, the amount of income the real estate yields is taken into consideration along with other rents in the area for comparable properties to derive the current value.
Arriving at a Value Conclusion
Combining information from all approaches, the appraiser is then ready to state an estimated market value for the subject property.
The estimate of value on the appraisal report is not necessarily what's being paid for the property even though it is likely the best indication of a property's market value
There are always mitigating factors such as seller motivation, urgency or 'bidding wars' that may adjust the final price up or down.
Regardless, the appraised value is typically employed as a guideline for lenders who don't want to loan a buyer more money than the property would likely sell for in an open marketplace.
The bottom line is: An appraiser from Jonathan Izumi Appraisal will help you get the most fair and balanced property value, so you can make profitable real estate decisions.
