Real Estate Appraisal - Mount Pleasant says check cutting was aboveboard

Mount Pleasant says check cutting was aboveboard
Charleston Post & Courier - from Motley Rice, and Mason and his partner will get their fair share. Using a good ol’ boy appraiser is the stupidest thing the Town could have done. They should have had an educated real estate appraiser, from out of state, do the appraisal in an

About Charley Rosen
FOXSports.com - Kevin Durant’s NBA career is still only 10 games old, but here’s an early appraisal of what he can and cannot do as well Phil that Shaq would be preferable because a great player in the middle can single-handedly control the critical real estate

THE SAVINGS GAME
Chicago Tribune - Brian Cohee, a self-described “very middle class” real estate appraiser, told me he used to spend $14 of his own money on film development and processing for every appraisal. When he bought a digital camera for $300 eight years ago, he elected to set

Real Estate Appraisal - Do Your Own (Real Estate Appraisal)

For single family homes, there are two basic methods used in real estate appraisal. They are replacement cost analysis, and using comparable sales. A third appraisal method, based on capitalization, is used for income properties, and is covered in another article.

In figuring replacement cost the question is: What would it cost to buy this land and put this house on it? If the land (improved) would cost $40,000, and the house could be built for $150,000, the value indicated would be around $190,000 - if the house is fairly new. If it has used up 10% of its useful life, you can deduct $15,000 for depreciation.

Replacement cost is not really a very useful measurement. It is difficult to say what the land is worth in a city center where none is left for sale, for example, and tough to gauge depreciation. It is used as a secondary method, and for unique homes that can’t be compared easily with others. The primary method of real estate appraisal used for homes is a market analysis using comparable sales.

Real Estate Appraisal 101

To get a good idea of what a home should sell for, you need to compare it to homes that have sold. Find at least three similar homes in the same area that have sold within the last year, preferably within the last six months. This information is available in the county records, or from a real estate agent with access to the MLS (multiple listing service).

Now the confusing part. You start with the selling price of each of your comparables. If your subject home has a second bathroom, and the a comparable doesn’t, you add the value of the bathroom to the sales price of the comparable. If a comparable home has a blacktop driveway, and the subject home doesn’t, you take the value away.

You are rectifying differences, to see what comparable homes would have sold for if they were like yours. So if a comparable sold for $140,000, and a bathroom is worth $15,000 in your area (ask a real estate agent for help with these figures), you ADD $15,000 for the bathroom it doesn’t have. Then you subtract, say $4,000, for the paved driveway it does have. This gives you a comparable sales price of $151,000.

You do this with all differences between the subject home and each comparable. When done, you average the three comparable prices. So if the three comparables have adjusted sales prices of $151,000, 162,000, and 149,000, you add the three figures and divide by three. The indicated value of the home is $154,000.

Of course all appraisal is an inexact science. If you can only find comparables sold over a year ago, you have to estimate appreciation in the area. If one sold with seller financing, you have to decide how this affected the price. For all of it’s flaws, however, for single family homes, this is the most accurate method of real estate appraisal.

About the author:
Steve Gillman has invested in real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Reassessments shock Franklin Co. (Real Estate Appraisal) residents

Reassessments shock Franklin Co. residents
Roanoke Times - The valuation is then used to determine a property owner’s real estate tax bill. “The county is growing faster than Botetourt,” said Steven Wampler, president of Wampler-Eanes appraisal group, the Daleville-based firm that handled the county’s

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dBusinessNews.com - company s home loans segment provides a range of services including originating and servicing home loans, offers real estate District Court in Seattle claims Washington Mutual, in cooperation with its appraisal firm, violated the Securities Exchange

Banks bitten as 5bn wiped off shares
Scotsman - of suicides, negative equity and redundancies from offices, call centres and estate 32 As you say it is not real money. That being said we should be concerned is another crisis that hit the news about Washington Mutual Bank using an appraisal

Real Estate Valuation (Real Estate Appraisal)

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Real estate valuation for single family homes is typically done by using comparable sales. With income properties this just doesn’t work well. Imagine if you are looking at a 24-unit building. It would be difficult to find similar ones nearby that have recently sold.

It’s also not ideal to use replacement costs for income property appraisal. How do you figure replacement cost if there is no land for sale nearby with proper zoning? This is used as a secondary method, though, and can tell you if maybe you should be building instead of buying.

Real Estate Valuation By Cap Rate

Income properties are bought for the income. Income, then, is what is used to determine value. The rate of return investors in a given area expect gives you the capitalization rate, or “cap rate” for the area. This is what you use to accurately appraise an income property. Below is a somewhat simplified explanation.

The process begins with the gross income of a property. You then subtract all expenses, but not loan payments. For example, if a building’s gross income is $82,000 per year, and the expenses $30,000, you have a net (before debt-service) of $52,000. You then apply the capitalization rate to this figure.

Suppose the acceptable cap rate in the area is .10, for example (ask a real estate agent), meaning investors expect a return of 10% on the value of the property. You simply divide the income of $52,000 by .10. $520,000, then, is the indicated value of the building. Suppose the usual rate is .08, meaning investors in the area expect an 8% return. Then the value would be $650,000.

Easy Real Estate Valuation?

Take net income before debt-service, and divide by the “cap rate:” It’s a simple formula. However, the tough part is getting accurate income figures. Did the seller show you ALL the normal expenses? Did he and exagerate the income? Suppose he stopped repairs for a year, and also showed you the “projected” rents. In that case, the income figure could be $15,000 too high. The building would be worth $187,000 less (.08 cap rate) than your appraisal shows.

One thing smart investors do when buying, is to separate out income from vending machines and laundry machines. If these provided $6,000 of the income, that income would add $75,000 to the appraised value (.08 cap rate). Instead, do the appraisal without this income included, then add back the replacement cost of the machines (probably much less than $75,000) to arrive at a valuation.

Of course, you should be careful with any real estate appraisal method. There is no perfect appraisal method, and all are only as good as the figures you plug into them. If used wisely, though, appraisal by capitalization rates is one of the most accurate methods of real estate valuation.

About the Author

Steve Gillman has invested in real estate for years. To learn more, get a free real estate investing course, and see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com