TAG has more than 20 years of experience in appraisal. They have a regional and local understanding of the real estate industry, including the various market sectors such as townhouses, starter homes, trade-up homes, luxury, and one-of-a-kind properties. Triangle Appraisal Group has connections with some of the area’s leading real estate agencies, brokers, and agents.
Appraisals are performed when a client or employer needs to decide, answer a question, make a choice, or determine a course of action. An appraisal does not make any recommendations or advise you on what to do. It just supplies you with a valid and defensible value of opinion. The nature of the question or choice specifies what value is to be appraised and, hence, the appraisal’s purpose. The evaluation report should be a self-contained document that can be used on its own.
An appraisal is an assessment of the property by an authorized person, such as real estate, a business, a collectible, or an antique. The authorized appraiser must be designated by a regulatory authority that governs the appraiser’s jurisdiction. Appraisals are commonly used for insurance and tax purposes, as well as to calculate a potential selling price for an item or property.
To assess the right value of an item or property, the appraiser can utilize any variety of valuation methodologies, including evaluating the current market worth of similar properties or things.
The one condition that all evaluations must meet is that the valuation estimate should be fully objective. It is critical that the appraiser commissioned to undertake an evaluation be totally independent (also known as “arm’s length”) from all stakeholders involved, allowing them to deliver a truly fair, objective, and unbiased estimate of worth.
How Does an Appraisal Work?
Appraisals are utilized in a variety of activities, including real estate purchases. If a home valuation, for example, is less than the buying price, mortgage lenders are unlikely to fund the transaction. The deal will not proceed unless the potential buyer is willing and able to pay the difference between the appraised value and the lender’s financing offer.
To assess the right value of an item or property, the appraiser can utilize any variety of valuation methodologies, including evaluating the current market worth of similar properties or things.
Many appraisals are undertaken for lending purposes. Property owners should be aware that under current federal lending regulations, the lender is required to “initiate” the assessment. The lender must contact the appraiser initially and supervise the appraisal procedure.
The Purpose of Appraisal?
The aim of an appraisal is to estimate a defined value of any real property interest or to undertake an analysis or consulting assignment to real property decisions. An appraisal may be required in a variety of circumstances, including:
- To make a transaction involving a certain asset easier: To assist negotiate a clearing price, both the buyer and seller must understand the asset’s estimated value.
- To obtain funding (credit): Financial institutions typically lend some loan-to-value (LTV) against various asset types, so an estimate of value is required before giving credit.
- To get an insurance policy on an asset: Insurance firms cannot give a policy value to an asset unless they know how much it is worth or how much it would cost to replace it.
- For estate and will planning: Families, their lawyers, and wealth consultants may want to know how much their assets are worth to assist in the distribution of those assets among beneficiaries.
- “Disputes” in a company: When shareholders of a private corporation disagree over who controls the company, an independent appraisal of that company may be required to support a buy-out.
- Divorce “disputes”: Divorce and/or separation are similar reasons for valuing assets, including a private business.
- In terms of taxation: A skilled appraiser can play an important role in evaluating the fair market value of assets for income tax, inheritance, and gift tax purposes.
What is Included in An Appraisal?
Appraisals are important documents as they affect buyers, sellers, and lenders. The value determined by an appraiser in their appraisal report ultimately serves as a benchmark for what a lender is likely to lend to a potential buyer.
Given the importance of appraisals in real estate transactions, it is useful to understand what a typical appraisal report comprises. Here are some additional specifics concerning the contents of an appraisal:
- The Cover Page
The appraiser and the firm are introduced, as well as when the date the inspection was performed. - The Letter of Transmittal
Contains information about who commissioned the appraisal, its intended purpose, and who the intended legal user(s) is. - The Executive Summary
A summary of the important findings is presented on a single page. - The Asset Description
All legal IDs for real property or equipment assets (such as legal addresses and serial numbers) are presented. The asset description contains an asset analysis, including quality notes, remaining usable life, particular problems or repairs, and a recent sales history. - The Asset Valuation
Additional information about the various valuation methodologies utilized, as well as any comparable properties (or other comparable assets) that were used to support the research are included. - The Certificate of the Appraiser
This section highlights the appraiser’s qualifications so that stakeholders can cross-reference which regulatory organizations have approved their credentials. - The Appendices
The appraisal report will include supporting documents such as maps, financial statements, information regarding calculations used, and a variety of other forms of significant material that do not fit elsewhere in the report.
What Is Appraisal in Real Estate?
An appraisal is an estimate of the current market worth of a home. This is done to ensure that buyers are not paying too much for the property. If the borrower stops making payments on the home and the lender needs to sell it, the lender wants to be certain that it can recoup the loan.
The estimate is completed by a licensed appraiser and is generated by comparing previous sales of homes in the area to the property being evaluated. This is a requirement from mortgage lenders to ensure that the money they are financing to a new or existing homeowner is a fair amount for the home.
The cost approach and sales comparison are the two evaluation approaches utilized for residential buildings. The former is used on newly constructed properties where the construction expenses are known. The value provided is an estimate of the cost of replacing the structure if it were destroyed. A sales comparison evaluates the market value of a home by comparing it to similar homes that have recently sold in the area.
Conclusion
Appraisal assists in determining the appropriate price for an asset, particularly when it is offered for purchase or sale. It benefits both the buyer and the seller because the former will not overpay for the asset and the latter will not accept a discounted price to sell the item.
At TAG, you will work with a team of knowledgeable experts to ensure that the job gets done efficiently with our tech-savvy approach. Contact us today!