Property Appraisal
A property appraiser does not just assess new properties or properties that are being placed on the market. Abbe Edelman and other appraisers sometimes are called in to perform a property appraisal for a foreclosure. It is not always the best to use the sales figures given by real estate agents or lending facilities due to the fact that the amount that was first agreed upon between buyer and seller may be flawed. Many times, sellers have overvalued their property so the foreclosure listing cannot be relied upon either. It is generally in best interest to obtain a property appraisal by a professional such as Abbe Edelman who can determine a more accurate house value for the property.
When to Obtain a Foreclosure Appraisal
The foreclosure process can be complicated and lengthy. Usually it is a lender who will request a foreclosure appraisal. This typically occurs when a borrower runs behind on their mortgage payment by 90 to 120 days. The purpose of obtaining a property appraisal at this time is so that the lender can have a good idea of the current house value. It is imperative that the homeowner and the lender know the difference between the fair market value for a property and the quick disposition value. An appraisal can determine what a home is worth so that when it goes for resale it can be marketed as As-Is, Short Sale or As-Repaired. Banks and lenders are ending up with more property through foreclosures. These must be sold but a current property appraisal is necessary in order to determine the fair market value and what the bank can expect to get out of the home.
Appraisal Methods
There are a couple of approaches that are generally taken to obtain a property appraisal. Most commonly, an appraiser will perform a comparative market analysis. This will compare the home to other similar homes from the same general region. They may look at things like lot size, square footage versus usable footage of the home, unfinished areas, type and style of construction, how old the home is and what special features it may have. By comparing these items with other homes in the same region a property appraiser can estimate how much the home is worth on the current market.
Another method that is used by appraisers is the cost approach. The property appraiser will look at how much it would cost to replace the structure if it were to be destroyed and then considers any reasonable depreciation in order to determine the worth of the property.
Appraisal Reports for Foreclosures
Generally, a property appraisal reflects market prices of similar homes that were purchased or sold in the previous 6 months. This means that the past prices have more influence on foreclosure appraisals than what may happen in the near future, even though the real estate market is continuing to improve. There are some limitations for property appraisals performed on homes that are going through the foreclosure process.
A property appraiser must size up a home according to the present fair market value. The trouble with this is that in a neighborhood that has predominantly had short sales and foreclosures, a home may be deemed worth much less. This means that a seller may be forced to take less than what they want for the property. There are pretty much two separate markets for homes: those in foreclosure and those which are not. Comparable homes which are located inside neighborhoods that have numerous foreclosures can be appraised at about 30 percent less than similar homes in areas that have not had an abundance of foreclosures.
