What is Appraisal – Joseph Mier & Associates Appraisers

Our people are our greatest assets

Acquiring a house is the most serious transaction many could ever encounter. Whether it’s a main residence, an additional vacation property or a rental fixer upper, purchasing real property is a complex transaction that requires multiple people working in concert to make it all happen.

You’re probably familiar with the parties having a role in the transaction. The real estate agent is the most familiar face in the exchange. Next, the bank provides the financial capital needed to fund the exchange. And ensuring all aspects of the transaction are completed and that a clear title transfers to the buyer from the seller is the title company.

To learn more about appraising, read below and or call us today to talk about your specific property.

Inspecting the subject property

Our first duty at Joseph Mier & Associates is to inspect the property to determine its true status. We must see aspects of the property first hand, such as the number of bedrooms and bathrooms, the location, living areas, etc, to ensure they truly exist and are in the shape a reasonable buyer would expect them to be. The inspection often includes a sketch of the floorplan, 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.

Following the inspection, we use two or three approaches to determining the value of the property: a paired sales analysis, a replacement cost calculation, and an income approach when rental properties are prevalent.

Cost Approach

Here, we use information on local construction costs, labor rates and other factors to ascertain how much it would cost to replace the property being appraised. This figure often sets the upper limit on what a property would sell for. It’s also the least used predictor of value.

Sales Comparison

Appraisers get to know the subdivisions in which they appraise. They innately understand the value of particular features to the homeowners of that area. Then, the appraiser researches recent transactions in close proximity to the subject and finds properties which are ‘comparable’ to the real estate in question. Using knowledge of the value of certain items such as square footage, additional bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we add or subtract from each comparable’s sales price so that they more accurately match the features of subject property.

If, for example, the comparable property has a storm shelter and the subject doesn’t, the appraiser may subtract the value of a storm shelter 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.

Once all necessary adjustments have been made, 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 Hammond and Tangipahoa, Joseph Mier & Associates is your local authority. The sales comparison approach to value is typically awarded the most importance when an appraisal is for a home exchange.

Valuation Using the Income Approach

A third way of valuing a property is sometimes applied when an area has a reasonable number of rental properties. In this scenario, the amount of income the property produces is factored in with other rents in the area for comparable properties to derive the current value.

Arriving at a Value Conclusion

Combining information from all approaches, the appraiser is then ready to document an estimated market value for the property in question. The estimate of value on the appraisal report is not necessarily what’s being paid for the property even though it is likely the best indication of a property’s valuePrices can always be driven up or down by extenuating circumstances like the motivation or urgency of a seller or ‘bidding wars’. Regardless, the appraised value is often used as a guideline for lenders who don’t want to loan a buyer more money than the property is actually worth. Here’s what it all boils down to, an appraiser from Joseph Mier & Associates will help you attain the most fair and balanced property value, so you can make the most informed real estate decisions.