Appraiser puts a price to the fair market value (rights of ownership). With the current location, amenities, and condition of the property, the appraisers write a detailed report. The detailed report states the comparison of local homes, imperfection of property, type of home, and danger to property. By the end of appraisal, the appraiser knows more about the property than the home owner.

On the process of applying for mortgage, the lender requires the selling price to meet or exceed the appraise value. The appraise value protects the lender in case of default on mortgage payments. That is why an appraiser is usually a third party with no financial connection to the lender, seller, or buyer.

Common Appraisal Approach

The three approaches to effectively appraise a real estate property are Sales Comparison, Cost, and Income Approach. In Sales Comparison Approach, the appraiser finds comparables or comps. The comparables or comps are another property in the same vicinity or location. There are no two properties exactly the same. So, the appraiser takes notes of the similarities and characteristics.

In Cost Approach, the appraisers check how much to build the residential real estate property. This approach plays a major role to new homes in which you can easily calculate the cost to build a new home. For many areas with booming real estate, the shortage of skilled labor drives the cost to build a new home high.

As for Income Approach, the appraiser checks the ability for the property to earn an income. For example, the home owner added a carport. Many tenants are willing to pay extra for the use of a carport. Let us say the home owner transform the carport into another room with kitchen and bathroom. The home owner can rent out the new room. The recent addition to the property increases the appraise value.

Common Use of Appraisal Value

The appraise value plays an important role on mortgage application, mortgage refinance, divorce, estate settlement, employee relocation, and buyer offer. As you are aware on mortgage application and refinance, the home selling price must meet or exceed the appraise value.

When the time comes to partition the ownership of the real estate property, the appraise value becomes important once again. For example, the divorce, or estate settlement are good examples.

An employee may opt to take another position in their company. This happens to promotion. The management positions are usually at the head office. So, the company helps an employee to relocate. The employee has no idea about the fair market value of the new location. With the appraise value available, he makes a correct offer.

By: Dennis Estrada

About the Author:
Dennis Estrada is a webmaster of mortgage calculators website which calculate the monthly payment, bi-weekly payment, affordability, refinance, annual percentage rate, discount points, and more.

Having a professional home appraisal done is an essential step to selling your home, determining your property value and deciding how much you will qualify for in the event that you decide to take a second mortgage out on your home. Of course getting a professional home appraisal done on your home can be costly. There are a number of factors that determine the cost of a home appraisal. Here are the different factors that could contribute to the overall cost of your home appraisal:

What Kind of Appraisal do you want to have done? There are different types of professional appraisals that can be done on your home, but the most common is the Uniform Residential Appraisal Report (also known as the URAR). There are also shorter appraisals, often called the “Drive By Appraisal” due to the small amount of time spent assessing the property and these can cost less. Not all banks or lenders will accept these shorter appraisals, though. Make sure you check with your lender when you are deciding which one to get.

What kind of property do you have? That type of property being appraised will also figure in to the overall cost of the appraisal. Usually multi-family properties will cost more to appraise than a single family home or condominium.

What is the value of your property? Yes, this is one of the things you are having appraised, but typically the higher priced pieces of property will have a larger appraisal cost than the lower priced pieces of property. A typical cut off is five hundred thousand dollars. If your home and property are worth more than five hundred thousand dollars, your appraisal is going to cost more.

What is the property used for? A piece of property that is used to generate income is going to cost more to appraise than a piece of property that is not used for such a purpose. An appraisal of a rental property would include a rent survey as well as an income statement for the property.

Sadly, the cost of an appraisal is relative. One cost does not fit all.

By: Max Suther

About the Author:
Find out what home appraisal costs are at http://www.homeappraisedvalue.com where you will find home appraisal calculators, tips on lowing appraisal costs, and home appraisal prices.