| Actually, there are two home values, the value to | | | | Approach: The appraiser searches for comparable |
| the homeowner and the value to the potential buyer. | | | | homes in your neighborhood, subdivision or within |
| Unfortunately, both values are emotional and not | | | | your city with comparable neighborhoods. Cost |
| facts based on market data. The homeowner has | | | | Approach/Cost analysis: The appraiser calculates the |
| time in the home, family, years of memories, children | | | | cost to build your home at current material and labor |
| growing up, maintenance, perhaps blood sweat and | | | | costs, less depreciation for structural damage, poor |
| tears in room additions, kitchen or bath remodeling. | | | | upkeep and neighborhood disintegration. Income |
| Obviously the owner places a high value on his/her | | | | Approach: The income approach does not apply to |
| castle and rightly so. | | | | residential market value. This approach applies to |
| The buyers on the other hand see things differently | | | | income producing properties such as residential |
| and act on different emotions. The buyers are | | | | duplexes, apartments and of course commercial |
| looking for that emotional spark at the first viewing. | | | | properties. |
| The all-important first impression is what drives the | | | | If the property being appraised is a residential |
| potential buyers...at first. From there the first | | | | structure many factors are taken into consideration |
| impression quickly turns to affordability, the cost to | | | | beyond the physical attributes of the property. The |
| get in the home, the closing costs, the monthly | | | | appraiser also considers the compatibility of your |
| notes, the taxes. Should I make an offer? What is | | | | home within the neighborhood, such as does your |
| the least I should offer? | | | | neighborhood add to or reduce the value of your |
| Market value is somewhere between these two | | | | home? This involves pride in ownership factors, which |
| emotional extremes. This is where the appraiser | | | | occur in most communities. However, location, |
| comes in with an objective opinion backed by market | | | | location, location drives the final market analysis. The |
| data. Market value is defined as the price a willing | | | | appraiser considers the ebb and flow of growth and |
| buyer will pay to a willing seller for a product or | | | | its direction within your town or city due to |
| service. In real estate, this is known as an "arms | | | | socio-economic factors. In addition, future city |
| length transaction" meaning both buyer and seller | | | | planning contributes to a large degree in your home |
| acted willingly and not under duress. | | | | maintaining its present value. |
| Where does the appraiser begin and how do they | | | | In summary, determining the value of your home is a |
| arrive at those magic numbers called Market Value? | | | | complex procedure. The appraiser must know his/her |
| It is not magical at all; it is a methodical series of | | | | city well and all the socio-economic factors driving the |
| analytical steps. | | | | market. This takes years of observation, study, and |
| First, the appraiser makes a physical inspection of the | | | | considerable research by the appraiser. When |
| property, determining size of livable floor space and | | | | considering a professional appraisal, it is best to |
| making note of all amenities, such as the number of | | | | choose an appraiser who is certified and has any of |
| bedrooms and baths, the garage, washing facilities, | | | | the following professional designations: MAI (Member |
| storage areas, and any special features such as a | | | | American Institute) ASA (American Society of |
| fireplace, pool, patio or outbuildings. After a through | | | | Appraisers) SRA (Society of Appraisers) CRA |
| inspection, the appraiser has a starting point to arrive | | | | (Certified Real Estate Appraiser) IFAS (Independent |
| at market value. With all the physical data collected, | | | | Fee Appraisal Society). This list is a few of the most |
| the appraiser uses two or three methods to arrive at | | | | recognized professional appraisal organizations in |
| market value. The three methods are: Market | | | | America. |