California Real Estate Appraisals
Buying or selling a home is the most significant investment most of us may ever encounter. Whether it's where you raise your family, a seasonal vacation property or a rental fixer upper, the purchase of real property is a detailed financial transaction that requires multiple parties to pull it all off.
The majority of the parties participating are very familiar. The real estate agent is the most known entity in the transaction. Next, the lender provides the money required to bankroll the deal. And the title company sees to it that all requirements of the exchange
So, who determines the value of the property? This is where you meet with an appraiser from K1 Appraisal. We provide an unbiased opinion of what a buyer might expect to pay, or a seller receive, or retrospective date of death appraisal. A licensed, certified, professional appraiser from K1 Appraisal Services can satisfy your residential appraisal needs in Southern California.
Inspecting the subject property
To determine an accurate status of the property, it's our duty to first complete an inspection. Note that appraisal inspection is not a home inspection. We must see aspects of the property such as the number of bedrooms, bathrooms, the location, living areas, etc, to ensure they indeed are there and are in the condition a typical buyer would expect them to be. To ensure the stated size of the property has not been misrepresented and convey the layout of the house, the inspection may or may not include a sketch of the floorplan depending on type of the assignment. Most importantly, we identify any obvious features - or defects - that would affect the value of the property.
Once the site has been inspected, an appraiser may use all or any of the following approaches to determine the value of real property: sales comparison, cost approach, and, in the case of a rental property, an income approach.
Here, we gather information on local construction costs, labor rates and other factors to derive how much it would cost to replace the property being appraised. This figure commonly sets the maximum on what a property would sell for. The cost approach is also the least used predictor of value.
Appraisers can tell you a lot about the neighborhoods in which they appraise. They innately understand the value of specific features to the residents 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 remodeled rooms, types of flooring, energy efficient items, patios and porches, or additional storage space, we adjust the comparable properties so that they more accurately match the features of subject.
After all differences have been accounted for, the appraiser reconciles the adjusted sales prices of all the comps and then derives an opinion of what the subject could sell for. When it comes to associating a value with features of homes in Los Angeles and Orange County, K1 Appraisal Services can't be beat. 'Sales Comparison' approach to value is usually given the most importance when an appraisal is for a real estate transaction.
Valuation Using the Income Approach
A third way of valuing approach to value is sometimes applied when a neighborhood has a measurable number of rental properties. In this scenario, the amount of income the real estate produces is factored in with other rents in the area for comparable properties to give an indicator of the current market value.
The Bottom Line
Analyzing the data from all applicable approaches, the appraiser is then ready to state an estimated market value for the property in question. It is important to note that while this amount is probably the most accurate indication of what a house is worth, it probably will not be the final sales price. There are always mitigating factors such as seller motivation, urgency or 'bidding wars', that may adjust the final price up or down. But the appraised value is often used as a guideline for lenders who don't want to loan a buyer more money than they could recover in case they had to put the property on the market again. The bottom line is that at K1 Appraisal Services, we will do our best to satisfy your Real Estate Appraisal Needs.