To determine the value of your home a real estate professional can do a comparative study and an opinion of value. A realtor will inspect the home. Then he will over the sold data, assessment and tax rates to determine what your home is worth on a certain day in the market. He is keenly involved in the daily activities of the market which gives him added expertise.
A bank will hire an independent appraiser in the steps to qualify your home. An appraisal will assure the market value for the buyer or lender. Both a realtor and a appraiser consider the age of the home, the condition, floor plan, amenities, square footage, the lot size, improvements, location and the recent sales of comparable homes. There are three approaches that are used to arrive at an indication of value:
The Cost Approach estimates the cost of building a new property identical to the one being appraised based on current prices, adding land value and subtracting accumulated depreciation.
The Income Approach is often used for income-producing properties like commercial or tenanted homes. The value is the present worth of the income stream that the property is capable of producing at its fullest use.
The Direct Comparison Approach is based on the theory that an informed purchaser will only pay what a property is worth on a certain day relevant to close comparables. This is based on the selling price of other relevant homes in the area.
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