What is an appraisal
A home purchase is the largest, single investment most people will ever make. Whether it's a primary residence in Bronxville, New York, a second vacation home in North Salem, New York or an investment Brooklyn, New York, the purchase of New York real property is a complex financial transaction that requires multiple parties to pull it all off.
Most of the people involved are very familiar. The New York Realtor is the most common face of the transaction. The mortgage company provides the financial capital necessary to fund the transaction. The title company ensures that all aspects of the transaction are completed and that a clear title passes from the seller to the buyer.
So who makes sure the value of the property is in line with the amount being paid? There are too many people exposed in the real estate process to let such a transaction proceed without ensuring that the value of the property is commensurate with the amount being paid. Home values can vary greatly by location, even in the same town. A home located in Putnam County's Brewster may vary greatly from a similar home just blocks away. A 2000 square foot waterfront home located in Rye, New York will have a different appraisal value than a 2000 square foot Rye, New York home that is located inland.
This is where the New York appraisal and appraiser comes in. An New York appraisal is an unbiased estimate of what a buyer might expect to pay - or a seller receive - for a parcel of real estate, where both buyer and seller are informed parties. To be an informed party, most people turn to a New York licensed, certified, professional appraiser to provide them with the most accurate estimate of the true value of their property. A Yonkers, New York 2 bedroom waterfront Condo unit located on the top floor with unobstructed water views should appraise at a higher value than the same sized two bedroom Yonkers condo located in the same building but on the 2nd floor with no views. It is imperative that an unbiased opinion of value is rendered to ensure the interests all parties.
So what goes into a New York real estate appraisal? It all starts with the inspection. An appraiser's duty is to inspect the property being appraised to ascertain the true status of that property. The appraiser must actually see features, such as the number of bedrooms, bathrooms, the location, and so on, to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, the appraiser looks for any obvious features - or defects - that would affect the value of the house.
Once the site has been inspected, an appraiser uses two or three approaches to determining the value of real property: a cost approach, a sales comparison and, in the case of a rental property, an income approach.
The cost approach is the easiest to understand. The appraiser uses information on local New York building costs, labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for. Why would you pay more for an existing property in Staten Island if you could spend less and build a brand new home instead? While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach. For example the Yonkers, New York waterfront Condo appraisal would not factor a cost of the amenity of the water view in the cost approach. This would be more readily applies in the Sales Comparison approach to value.
Appraisers rely on the sales comparison approach to value these types of items. New York Appraisers get to know the neighborhoods in which they work, such has a Pelham Manor Appraiser, New Rochelle Appraiser and Bronxville Appraiser. We understand the value of certain features to the residents of those areas. We know the traffic patterns, the school zones, the busy throughways; and we use this information to determine which attributes of a property will make a difference in the value. For example, a property located in the Yonkers, New York school district with a Bronxville, New York post office will most probably have a value difference when compared to an identical home located just blocks away in the Bronxville school district. The Bronxville real estate appraiser researches recent sales in the vicinity and finds properties which are ''comparable'' to the subject being appraised in Bronxville. The sales prices of these properties are used as a basis to begin the sales comparison approach.
Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), the New York Westchester County appraiser adjusts the comparable properties to more accurately portray the subject property. For example, if the comparable property located in South Hampton, Suffolk County has an in ground swimming pool and the subject property in South Hampton, Suffolk County does not, the Suffolk County appraiser may deduct the value of the in ground swimming pool from the sales price of the comparable home. If the subject property in Port Washington, Nassau County has an extra half-bathroom and the comparable does not, the Nassau County appraiser might add a certain amount to the comparable property in Port Washington, Nassau County.
In the case of income producing properties - rental houses for example in Brooklyn, Kings County - the Brooklyn appraiser may use a third approach to valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.
Combining information from all approaches, the new york real estate appraiser is then ready to stipulate an estimated market value for the subject property. It is important to note that while this amount is probably the best indication of what a property is worth, it may 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 New York appraised value is often used as a guideline for lenders who don't want to loan a buyer more money that the property is actually worth. The bottom line is: a New York real estate appraiser will help you get the most accurate property value, so you can make the most informed real estate decisions.
MORE INFORMATION FROM CHRISTOPHER GRECO APPRAISAL SERVICES INC
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