Our first responsibility at CeCe Mendonsa is to inspect the property to determine its true status. We must see features first hand, such as the number of bedrooms and bathrooms, the location, amenities, etc., to ensure they indeed are present and are in the shape a typical person would expect them to be. The inspection often includes a sketch of the property, ensuring the square footage is proper and conveying the layout of the property. Most importantly, the appraiser identifies any obvious amenities – or defects – that would have an impact on the value of the property.
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.
Here, the appraiser analyzes information on local building costs, the cost of labor and other factors to calculate how much it would cost to construct a property similar to the one being appraised. This estimate usually sets the upper limit on what a property would sell for. The cost approach is also the least used method.
Appraisers are intimately familiar with the communities in which they appraise. We thoroughly understand the value of specific features to the homeowners of that area. Then, the appraiser looks up recent transactions in close proximity to the subject and finds properties which are ‘comparable’ to the subject at hand. Using knowledge of the value of certain items such as upgraded appliances, extra bathrooms, an additional living area, quality of construction, lot size, we add or subtract from each comparable’s sales price so that they are more accurately in line with the features of subject.
For example, if the comparable has a fireplace and the subject doesn’t, the appraiser may deduct the value of a fireplace from the sales price of the comparable home.
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.
A third way of valuing a house is sometimes applied when a neighborhood has a measurable number of rental properties. In this situation, the amount of income the property generates is taken into consideration along with income produced by nearby properties to give an indicator of the current value.
Combining information from all applicable approaches, the appraiser is then ready to document an estimated market value for the subject property. It is important to note that while the appraised value is probably the most accurate indication of what a house would sell for in an open market, it probably will not be the price at which the property closes. It’s not uncommon for prices to be driven up or down by extenuating circumstances like the motivation or urgency of a seller or ‘bidding wars’. 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 appraisal from CeCe Mendonsa will help you discover the most fair and balanced property value, so you can make the most informed real estate decisions.